1990.
Consequently, on March 16, 1990, the Philippine
PHILIPPINE NATIONAL BANK, petitioner, vs. HON.
MARCELINO L. SAYO, JR., in his capacity as
Presiding Judge of the Regional Trial Court
of Manila (Branch 45), NOAHS ARK SUGAR
REFINERY, ALBERTO T. LOOYUKO, JIMMY T.
GO and WILSON T. GO, respondents.
DECISION
DAVIDE, JR., J.:
In this special civil action for certiorari, actually
the third dispute between the same private parties to
have reached this Court,[1] petitioner asks us to annul
the orders[2] of 15 April 1997 and 14 July 1997 issued
in Civil Case No. 90-53023 by the Regional Trial Court,
Manila, Branch 45. The first order [3] granted private
respondents motion for execution to satisfy their
warehousemans lien against petitioner, while the
second order[4] denied, with finality, petitioners motion
for reconsideration of the first order and urgent
motion to lift garnishment, and private respondents
motion for partial reconsideration.
The factual antecedents until the commencement
of G.R. No. 119231 were summarized in our decision
therein, as follows:
In accordance with Act No. 2137, the Warehouse
Receipts Law, Noahs Ark Sugar Refinery issued on
several dates, the following Warehouse Receipts
(Quedans): (a) March 1, 1989, Receipt No. 18062,
covering sugar deposited by Rosa Sy; (b) March 7,
1989, Receipt No. 18080, covering sugar deposited by
RNS Merchandising (Rosa Ng Sy); (c) March 21, 1989,
Receipt No. 18081, covering sugar deposited by St.
Therese Merchandising; (d) March 31, 1989, Receipt
No. 18086, covering sugar deposited by St. Therese
Merchandising; and (e) April 1, 1989, Receipt No.
18087, covering sugar deposited by RNS
Merchandising. The receipts are substantially in the
form, and contains the terms, prescribed for negotiable
warehouse receipts by Section 2 of the law.
Subsequently, Warehouse Receipts Nos. 18080 and
18081 were negotiated and endorsed to Luis T. Ramos,
and Receipts Nos. 18086, 18087 and 18062 were
negotiated and endorsed to Cresencia K. Zoleta. Ramos
and Zoleta then used the quedans as security for two
loan agreements one for P15.6 million and the other
for P23.5 million obtained by them from the Philippine
National Bank. The aforementioned quedans were
endorsed by them to the Philippine National Bank.
Luis T. Ramos and Cresencia K. Zoleta failed to pay
their loans upon maturity on January 9,
National Bank wrote to Noahs Ark Sugar Refinery
demanding delivery of the sugar stocks covered by the
quedans endorsed to it by Zoleta and Ramos. Noahs
Ark Sugar Refinery refused to comply with the demand
alleging ownership thereof, for which reason the
Philippine National Bank filed with the Regional Trial
Court of Manila a verified complaint for Specific
Performance with Damages and Application for Writ of
Attachment against Noahs Ark Sugar Refinery, Alberto
T. Looyuko, Jimmy T. Go and Wilson T. Go, the last three
being identified as the sole proprietor, managing
partner, and Executive Vice President of Noahs Ark,
respectively.
Respondent Judge Benito C. Se, Jr., [to] whose sala the
case was raffled, denied the Application for
Preliminary Attachment. Reconsideration therefor was
likewise denied.
Noahs Ark and its co-defendants filed an Answer with
Counterclaim and Third-Party Complaint in which they
claimed that they [were] the owners of the subject
quedans and the sugar represented therein, averring as
they did that:
9. *** In an agreement dated April 1, 1989, defendants
agreed to sell to Rosa Ng Sy of RNS Merchandising and
Teresita Ng of St. Therese Merchandising the total
volume of sugar indicated in the quedans stored at
Noahs Ark Sugar Refinery for a total consideration
of P63,000,000.00, *** The corresponding payments in
the form of checks issued by the vendees in favor of
defendants were subsequently dishonored by the
drawee banks by reason of payment stopped and
drawn against insufficient funds, *** Upon proper
notification to said vendees and plaintiff in due course,
defendants refused to deliver to vendees therein the
quantity of sugar covered by the subject quedans.
10. *** Considering that the vendees and first
endorsers of subject quedans did not acquire
ownership thereof, the subsequent endorsers and
plaintiff itself did not acquire a better right of
ownership than the original vendees/first endorsers.
The Answer incorporated a Third-Party Complaint by
Alberto T. Looyuko, Jimmy T. Go and Wilson T. Go,
doing business under the trade name and style Noahs
Ark Sugar Refinery against Rosa Ng Sy and Teresita Ng,
praying that the latter be ordered to deliver or return
to them the quedans (previously endorsed to PNB and
the subject of the suit) and pay damages and litigation
expenses.
The Answer of Rosa Ng Sy and Teresita Ng, dated
September 6, 1990, one of avoidance, is essentially to
the effect that the transaction between them, on the
one hand, and Jimmy T. Go, on the other, concerning the
quedans and the sugar stocks covered by them was
merely a simulated one being part of the latters
complex banking schemes and financial maneuvers,
and thus, they are not answerable in damages to him.
On January 31, 1991, the Philippine National Bank filed
a Motion for Summary Judgment in favor of the
plaintiff as against the defendants for the reliefs prayed
for in the complaint.
On May 2, 1991, the Regional Trial Court issued an
order denying the Motion for Summary
Judgment. Thereupon, the Philippine National Bank
filed a Petition for Certiorari with the Court of Appeals,
docketed as CA-G.R. SP No. 25938 on December 13,
1991.
Pertinent portions of the decision of the Court of
Appeals read:
In issuing the questioned Orders, the respondent Court
ruled that questions of law should be resolved after
and not before, the questions of fact are properly
litigated. A scrutiny of defendants affirmative defenses
does not show material questions of fact as to the
alleged nonpayment of purchase price by the
vendees/first endorsers, and which nonpayment is not
disputed by PNB as it does not materially affect PNBs
title to the sugar stocks as holder of the negotiable
quedans.
What is determinative of the propriety of summary
judgment is not the existence of conflicting claims from
prior parties but whether from an examination of the
pleadings, depositions, admissions and documents on
file, the defenses as to the main issue do not tender
material questions of fact (see Garcia vs. Court of
Appeals, 167 SCRA 815) or the issues thus tendered
are in fact sham, fictitious, contrived, set up in bad faith
or so unsubstantial as not to constitute genuine issues
for trial. (See Vergara vs. Suelto, et al., 156 SCRA 753;
Mercado, et al. vs. Court of Appeals, 162 SCRA 75). [sic]
The questioned Orders themselves do not specify what
material facts are in issue. (See Sec. 4, Rule 34, Rules of
Court).
To require a trial notwithstanding pertinent allegations
of the pleadings and other facts appearing on the
record, would constitute a waste of time and an
injustice to the PNB whose rights to relief to which it is
plainly entitled would be further delayed to its
prejudice.
In issuing the questioned Orders, We find the
respondent Court to have acted in grave abuse of
discretion which justify holding null and void and
setting aside the Orders dated May 2 and July 4, 1990
of respondent Court, and that a summary judgment be
rendered forthwith in favor of the PNB against Noahs
Ark Sugar Refinery, et al., as prayed for in petitioners
Motion for Summary Judgment.
On December 13, 1991, the Court of Appeals nullified
and set aside the orders of May 2 and July 4, 1990 of
the Regional Trial Court and ordered the trial court to
render summary judgment in favor of the PNB. On June
18, 1992, the trial court rendered judgment dismissing
plaintiffs complaint against private respondents for
lack of cause of action and likewise dismissed private
respondents counterclaim against PNB and of the
Third-Party Complaint and the Third-Party Defendants
Counterclaim. On September 4, 1992, the trial court
denied PNBs Motion for Reconsideration.
On June 9, 1992, the PNB filed an appeal from the RTC
decision with the Supreme Court, G.R. No. 107243, by
way of a Petition for Review on Certiorari under Rule
45 of the Rules of Court. This Court rendered judgment
on September 1, 1993, the dispositive portion of which
reads:
WHEREFORE, the trial judges decision in Civil Case No.
90-53023, dated June 18, 1992, is reversed and set
aside and a new one rendered conformably with the
final and executory decision of the Court of Appeals in
CA-G.R. SP No. 25938, ordering the private
respondents Noahs Ark Sugar Refinery, Alberto T.
Looyuko, Jimmy T. Go and Wilson T. Go, jointly and
severally:
(a) to deliver to the petitioner Philippine National
Bank, the sugar stocks covered by the Warehouse
Receipts/Quedans which are now in the latters
possession as holder for value and in due course; or
alternatively, to pay (said) plaintiff actual damages in
the amount of P39.1 million, with legal interest thereon
from the filing of the complaint until full payment; and
(b) to pay plaintiff Philippine National Bank attorneys
fees, litigation expenses and judicial costs hereby fixed
at the amount of One Hundred Fifty Thousand Pesos
(P150,000.00) as well as the costs.
SO ORDERED.
On September 29, 1993, private respondents moved
for reconsideration of this decision. A
Supplemental/Second Motion for Reconsideration with
leave of court was filed by private respondents on
November 8, 1993. We denied private respondents PNBS RIGHT TO A WRIT OF EXECUTION IS
motion on January 10, 1994. SUPPORTED BY TWO FINAL AND
EXECUTORY DECISIONS: THE DECEMBER
Private respondents filed a Motion Seeking 13, 1991 COURT OF APPEALS [sic]
Clarification of the Decision, dated September 1, DECISION IN CA-G.R. SP NO. 25938; AND,
1993. We denied this motion in this manner: THE NOVEMBER 9, 1992 SUPREME
COURT DECISION IN G.R. NO.
It bears stressing that the relief granted in this Courts 107243. RESPONDENT RTCS
decision of September 1, 1993 is precisely that set out MINISTERIAL AND MANDATORY DUTY IS
in the final and executory decision of the Court of TO ISSUE THE WRIT OF EXECUTION TO
Appeals in CA-G.R. SP No. 25938, dated December 13, IMPLEMENT THE DECRETAL PORTION OF
1991, which was affirmed in toto by this Court and SAID SUPREME COURT DECISION.
which became unalterable upon becoming final and II
executory.
RESPONDENT RTC IS WITHOUT
Private respondents thereupon filed before the trial JURISDICTION TO HEAR PRIVATE
court an Omnibus Motion seeking among others the RESPONDENTS OMNIBUS MOTION. THE
deferment of the proceedings until private respondents CLAIMS SET FORTH IN SAID MOTION: (1)
[were] heard on their claim for warehousemans WERE ALREADY REJECTED BY THE
lien. On the other hand, on August 22, 1994, the SUPREME COURT IN ITS MARCH 9, 1994
Philippine National Bank filed a Motion for the RESOLUTION DENYING PRIVATE
Issuance of a Writ of Execution and an Opposition to RESPONDENTS MOTION FOR
the Omnibus Motion filed by private respondents. CLARIFICATION OF DECISION IN G.R. NO.
107243; AND (2) ARE BARRED FOREVER
The trial court granted private respondents Omnibus BY PRIVATE RESPONDENTS FAILURE TO
Motion on December 20, 1994 and set reception of INTERPOSE THEM IN THEIR ANSWER,
evidence on their claim for warehousemans lien. The AND FAILURE TO APPEAL FROM THE
resolution of the PNBs Motion for Execution was JUNE 18, 1992 DECISION IN CIVIL CASE
ordered deferred until the determination of private NO. 90-52023.
respondents claim. III

On February 21, 1995, private respondents claim for
lien was heard and evidence was received in support
thereof. The trial court thereafter gave both parties five
(5) days to file respective memoranda.
On February 28, 1995, the Philippine National Bank
filed a Manifestation with Urgent Motion to Nullify
Court Proceedings. In adjudication thereof, the trial
court issued the following order on March 1, 1995:
WHEREFORE, this court hereby finds that there exists
in favor of the defendants a valid warehousemans lien
under Section 27 of Republic Act 2137 and accordingly,
execution of the judgment is hereby ordered stayed
and/or precluded until the full amount of defendants
lien on the sugar stocks covered by the five (5)
quedans subject of this action shall have been satisfied
conformably with the provisions of Section 31 of
Republic Act 2137.[5]
Unsatisfied with the trial courts order of 1 March
1995, herein petitioner filed with us G.R. No. 119231,
contending:
I In view of the foregoing, the rule may be simplified
RESPONDENT RTCS ONLY JURISDICTION
IS TO ISSUE THE WRIT TO EXECUTE THE
SUPREME COURT DECISION. THUS, PNB IS
ENTITLED TO: (1) A WRIT
OF CERTIORARI TO ANNUL THE RTC
RESOLUTION DATED DECEMBER 20, 1994
AND THE ORDER DATED FEBRUARY 7,
1995 AND ALL PROCEEDINGS TAKEN BY
THE RTC THEREAFTER; (2) A WRIT OF
PROHIBITION TO PREVENT RESPONDENT
RTC FROM FURTHER PROCEEDING WITH
CIVIL CASE NO. 90-53023 AND
COMMITTING OTHER ACTS VIOLATIVE OF
THE SUPREME COURT DECISION IN G.R.
NO. 107243; AND (3) A WRIT
OF MANDAMUS TO COMPEL RESPONDENT
RTC TO ISSUE THE WRIT TO EXECUTE
THE SUPREME COURT JUDGMENT IN
FAVOR OF PNB.
In our decision of 18 April 1996 in G.R. No.
119231, we held against herein petitioner as to these
issues and concluded:
thus: While the PNB is entitled to the stocks of sugar as
the endorsee of the quedans, delivery to it shall be
effected only upon payment of the storage fees.
Imperative is the right of the warehouseman to
demand payment of his lien at this juncture, because,
in accordance with Section 29 of the Warehouse
Receipts Law, the warehouseman loses his lien upon
goods by surrendering possession thereof. In other
words, the lien may be lost where the warehouseman
surrenders the possession of the goods without
requiring payment of his lien, because a
warehousemans lien is possessory in nature.
We, therefore, uphold and sustain the validity of the
assailed orders of public respondent, dated December
20, 1994 and March 1, 1995.
In fine, we fail to see any taint of abuse of discretion on
the part of the public respondent in issuing the
questioned orders which recognized the legitimate
right of Noahs Ark, after being declared as
warehouseman, to recover storage fees before it would
release to the PNB sugar stocks covered by the five (5)
Warehouse Receipts. Our resolution, dated March 9,
1994, did not preclude private respondents unqualified
right to establish its claim to recover storage fees
which is recognized under Republic Act No.
2137. Neither did the Court of Appeals decision, dated
December 13, 1991, restrict such right.
Our Resolutions reference to the decision by the Court
of Appeals, dated December 13, 1991, in CA-G.R. SP No.
25938, was intended to guide the parties in the
subsequent disposition of the case to its final end. We
certainly did not foreclose private respondents
inherent right as warehouseman to collect storage fees
and preservation expenses as stipulated on the face of
each of the Warehouse Receipts and as provided for in
the Warehouse Receipts Law (R.A. 2137).[6]
Petitioners motion to reconsider the decision in
G.R. No. 119231 was denied.
After the decision in G.R. No. 119231 became final
and executory, various incidents took place before the
trial court in Civil Case No. 90-53023. The petition in
this case summarizes these as follows:
3.24 Pursuant to the abovementioned Supreme Court
Decision, private respondents filed a Motion for
Execution of Defendants Lien as Warehouseman dated
27 November 1996. A photocopy of said Motion for
Execution is attached hereto as Annex I.
3.25 PNB opposed said Motion on the following
grounds:
(a) The lien claimed by Noahs Ark in the
unbelievable amount
of P734,341,595.06 is illusory;
and
(b) There is no legal basis for execution
of defendants lien as
warehouseman unless and until
PNB compels the delivery of the
sugar stocks.
3.26 In their Reply to Opposition dated 18 January
1997, private respondents pointed out that a lien
existed in their favor, as held by the Supreme Court. In
its Rejoinder dated 7 February 1997, PNB countered
private respondents argument, pointing out that the
dispositive portion of the court a quos Order dated 1
March 1995 failed to state the amount for which
execution may be granted and, thus, the same could not
be the subject of execution; and (b) private
respondents should instead file a separate action to
prove the amount of its claim as warehouseman.
3.27 The court a quo, this time presided by herein
public respondent, Hon. Marcelino L. Sayo Jr., granted
private respondents Motion for Execution. In its
questioned Order dated 15 April 1997 (Annex A), the
court a quo ruled in this wise:
Accordingly, the computation of accrued storage fees
and preservation charges presented in evidence by the
defendants, in the amount of P734,341,595.06 as of
January 31, 1995 for the 86,356.41 50 kg. bags of sugar,
being in order and with sufficient basis, the same
should be granted. This Court consequently rejects
PNBs claim of no sugar no lien, since it is undisputed
that the amount of the accrued storage fees is
substantially in excess of the alternative award of P39.1
Million in favor of PNB, including legal interest
and P150,000.00 in attorneys fees, which PNB is
however entitled to be credited x x x.
xxxxxxxxx
WHEREFORE, premises considered and finding merit
in the defendants motion for execution of their claim
for lien as warehouseman, the same is hereby
GRANTED. Accordingly, let a writ of execution issue for
the amount of P662,548,611.50, in accordance with the
above disposition.
SO ORDERED. (Emphasis supplied.)
3.28 On 23 April 1997, PNB was immediately served
with a Writ of Execution for the amount
of P662,548,611.50 in spite of the fact that it had not
yet been served with the Order of the court a quo dated
15 April 1997. PNB thus filed an Urgent Motion dated
23 April 1997 seeking the deferment of the
enforcement of the Writ of Execution. A photocopy of
the Writ of Execution is attached hereto as Annex J.
3.29 Nevertheless, the Sheriff levied on execution
several properties of PNB. Firstly, a Notice of Levy
dated 24 April 1997 on a parcel of land with an area of
Ninety-Nine Thousand Nine Hundred Ninety-Nine
(99,999) square meters, covered by Transfer
Certificate of Title No. 23205 in the name of PNB, was
served upon the Register of Deeds of Pasay
City. Secondly, a Notice of Garnishment dated 23 April
1997 on fund deposits of PNB was served upon the
Bangko Sentral ng Pilipinas. Photocopies of the Notice
of Levy and the Notice of Garnishment are attached
hereto as Annexes K and L, respectively.
3.30 On 28 April 1997, petitioner filed a Motion for
Reconsideration with Urgent Prayer for Quashal of
Writ of Execution dated 15 April 1997. Petitioners
Motion was based on the following grounds:
(1) Noahs Ark is not entitled to a
warehousemans lien in the humongous
amount of P734,341,595.06 because the
same has been waived for not having
been raised earlier as either
counterclaim or defense against PNB;
(2) Assuming said lien has not been waived,
the same, not being registered, is already
barred by prescription and/or laches;
(3) Assuming further that said lien has not
been waived nor barred, still there was
no complaint ever filed in court to
effectively commence this entirely new
cause of action;
(4) There is no evidence on record which
would support and sustain the claim
of P734,341,595.06 which is excessive,
oppressive and unconscionable;
(5) Said claim if executed would constitute
unjust enrichment to the serious
prejudice of PNB and indirectly the
Philippine Government, who innocently
acquired the sugar quedans through
assignment of credit;
(6) In all respects, the decisions of both the
Supreme Court and of the former
Presiding Judge of the trial court do not
contain a specific determination and/or
computation of warehousemans lien,
thus requiring first and foremost a fair
hearing of PNBs evidence, to include the
true and standard industry rates on
sugar storage fees, which if computed at
such standard rate of thirty centavos per
kilogram per month, shall result in the
sum of about Three Hundred Thousand
Pesos only.
3.31 In its Motion for Reconsideration, petitioner
prayed for the following reliefs:
1. PNB be allowed in the meantime to exercise its basic
right to present evidence in order to prove the above
allegations especially the true and reasonable storage
fees which may be deducted from PNBs judgment
award of P39.1 Million, which storage fees if computed
correctly in accordance with standard sugar industry
rates, would amount to only P300 Thousand Pesos,
without however waiving or abandoning its (PNBs)
legal positions/contentions herein abovementioned.
2. The Order dated April 15, 1997 granting the Motion
for Execution by defendant Noahs Ark be set aside.
3. The execution proceedings already commenced by
said sheriffs be nullified at whatever stage of
accomplishment.
A photocopy of petitioners Motion for Reconsideration
with Urgent Prayer for Quashal of Writ of Execution is
attached hereto and made integral part hereof as
Annex M.
3.32 Private respondents filed an Opposition with
Motion for Partial Reconsideration dated 8 May
1997. Still discontented with the excessive and
staggering amount awarded to them by the court a quo,
private respondents Motion for Partial Reconsideration
sought additional and continuing storage fees over and
above what the court a quo had already unjustly
awarded. A photocopy of private respondents
Opposition with Motion for Partial Reconsideration
dated 8 May 1997 is attached hereto as Annex N.
3.32.1 Private respondents prayed for the further
amount of P227,375,472.00 in storage fees from 1
February 1995 until 15 April 1997, the date of the
questioned Order granting their Motion for Execution.
3.32.2 In the same manner, private respondents prayed
for a continuing amount of P345,424.00 as daily
storage fees after 15 April 1997 until the total amount
of the storage fees is satisfied.
3.33 On 19 May 1997, PNB filed its Reply with
Opposition (To Defendants Opposition with Partial
Motion for Reconsideration), containing therein the
following motions: (i) Supplemental Motion for
Reconsideration; (ii) Motion to Strike out the
Testimony of Noahs Arks Accountant Last February 21,
1995; and (iii) Motion for the Issuance of a Writ of
Execution in favor of PNB.In support of its pleading,
petitioner raised the following:
(1) Private respondents failed to pay the
appropriate docket fees either for its
principal claim or for its additional
claim, as said claims for warehousemans
lien were not at all mentioned in their
answer to petitioners Complaint;
(2) The amount awarded by the court a
quo was grossly and manifestly
unreasonable, excessive, and oppressive;
(3) It is the dispositive portion of the decision
which shall be controlling in any
execution proceeding. If no specific
award is stated in the dispositive
portion, a writ of execution supplying an
amount not included in the dispositive
portion of the decision being executed is
null and void;
(4) Private respondents failed to prove the
existence of the sugar stocks in Noahs
Arks warehouses. Thus, private
respondents claims are mere paper liens
which cannot be the subject of
execution;
(5) The attendant circumstances, particularly
Judge Ses Order of 1 March 1995
onwards, were tainted with fraud and
absence of due process, as PNB was not
given a fair opportunity to present its
evidence on the matter of the
warehousemans lien. Thus, all orders
prescinding thereform, including the
questioned Order dated 15 April 1997,
must perforce be set aside and the
execution proceedings against PNB be
permanently stayed.
3.34 On 6 May 1997, petitioner also filed an Urgent
Motion to Lift Garnishment of PNB Funds with Bangko
Sentral ng Pilipinas.
3.35 On 14 July 1997, respondent Judge issued the
second Order (Annex B), the questioned part of the
dispositive portion of which states:
WHEREFORE, premises considered, the plaintiff
Philippine National Banks subject Motion for
Reconsideration With Urgent Prayer for Quashal of
Writ of Execution dated April 28, 1997 and undated
Urgent Motion to Lift Garnishment of PNB Funds With
Bangko Sentral ng Pilipinas filed on May 6, 1997,
together with all its related Motions are all DENIED
with finality for lack of merit.
xxxxxxxxx
The Order of this Court dated April 15, 1997, the final
Writ of Execution likewise dated April 15, 1997 and the
corresponding Garnishment all stand firm.
SO ORDERED.[7]
Aggrieved thereby, petitioners filed this petition,
alleging as grounds therefor, the following:
A. THE COURT A QUO ACTED WITHOUT OR
IN EXCESS OF ITS JURISDICTION OR WITH
GRAVE ABUSE OF DISCRETION WHEN IT
ISSUED A WRIT OF EXECUTION IN FAVOR OF
DEFENDANTS FOR THE AMOUNT
OF P734,341,595.06.
4.1 The court a quo had no authority to issue a writ
of execution in favor of private respondents as
there was no final and executory judgment ripe for
execution.
4.2 Public respondent judge patently exceeded the
scope of his authority in making a determination of
the amount of storage fees due private respondents
in a mere interlocutory order resolving private
respondents Motion for Execution.
4.3 The manner in which the court a quo awarded
storage fees in favor of private respondents and
ordered the execution of said award was arbitrary
and capricious, depriving petitioner of its inherent
substantive and procedural rights.
B. EVEN ASSUMING ARGUENDO THAT THE
COURT A QUO HAD AUTHORITY TO GRANT
PRIVATE RESPONDENTS MOTION FOR
EXECUTION, THE COURT A QUO ACTED
WITH GRAVE ABUSE OF DISCRETION IN
AWARDING THE HIGHLY UNREASONABLE,
UNCONSCIONABLE, AND EXCESSIVE
AMOUNT OF P734,341,595.06 IN FAVOR OF
PRIVATE RESPONDENTS.
4.4 There is no basis for the court a quos award
of P734,341,595.06 representing private
respondents alleged warehousemans lien.
4.5 PNB has sufficient evidence to show that the
astronomical amount claimed by private
respondents is very much in excess of the industry
rate for storage fees and preservation expenses.
C. PUBLIC RESPONDENT JUDGES GRAVE
ABUSE OF DISCRETION BECOMES MORE
PATENT AFTER A CLOSE PERUSAL OF THE
QUESTIONED ORDER DATED 14 JULY 1997.
4.6 The court a quo resolved a significant and
consequential matter entirely relying on documents
submitted by private respondents totally
disregarding clearly contrary evidence submitted
by PNB.
4.7 The court a quo misquoted and misinterpreted
the Supreme Court Decision dated 18 April 1997.
D. THE COURT A QUO ACTED WITH GRAVE
ABUSE OF DISCRETION IN NOT HOLDING
THAT PRIVATE RESPONDENTS HAVE LONG
WAIVED THEIR RIGHT TO CLAIM ANY
WAREHOUSEMANS LIEN.
4.8 Private respondents raised the matter of their
entitlement to a warehousemans lien for storage
fees and preservation expenses for the first time
only during the execution proceedings of the
Decision in favor of PNB.
4.9 Private respondents claim for warehousemans
lien is in the nature of a compulsory counterclaim
which should have been included in private
respondents answer to the Complaint.Private
respondents failed to include said claim in their
answer either as a counterclaim or as an
alternative defense to PNBs Complaint.
4.10 Private respondents claim is likewise lost by
virtue of a specific provision of the Warehouse
Receipts Law and barred by prescription and
laches.
E. PUBLIC RESPONDENT JUDGE ACTED WITH
GRAVE ABUSE OF DISCRETION IN REFUSING
TO LIFT THE ORDER OF GARNISHMENT OF
THE FUNDS OF PNB WITH THE BANGKO
SENTRAL NG PILIPINAS.
4.11 Public respondent judge failed to consider
PNBs arguments in support of its Urgent Motion to
Lift Garnishment.[8]
In arguing its cause, petitioner explained that this
Courts decision in G.R. No. 119231 merely affirmed the
trial courts resolutions of 20 December 1994 and 1
March 1995. The earlier resolution set private
respondents reception of evidence for hearing to prove
their warehousemans lien and, pending determination
thereof, deferred petitioners motion for execution of
the summary judgment rendered in petitioners favor in
G.R. No. 107243. The subsequent resolution recognized
the existence of a valid warehousemans lien without,
however, specifying the amount, and required its full
satisfaction by petitioner prior to the execution of the
judgment in G.R. No. 107243.
Under said circumstances, petitioner reiterated
that neither this Courts decision nor the trial courts
resolutions specified any amount for the
warehousemans lien, either in the bodies or dispositive
portions thereof. Petitioner therefore questioned the
propriety of the computation of the warehousemans
lien in the assailed order of 15 April 1997.
Petitioner further characterized as highly irregular
the trial courts final determination of such lien in a
mere interlocutory order without explanation, as such
should or could have been done only by way of a
judgment on the merits. Petitioner likewise reasoned
that a writ of execution was proper only to implement
a final and executory decision, which was not present
in the instant case. Petitioner then cited the cases of
Edward v. Arce, where we ruled that the only portion of
the decision which could be the subject of execution
was that decreed in the dispositive part, [9] and Ex-
Bataan Veterans Security Agency, Inc. v. National Labor
Relations Commission,[10] where we held that a writ of
execution should conform to the dispositive portion to
be executed, otherwise, execution becomes void if in
excess of and beyond the original judgment.
Petitioner likewise emphasized that the hearing of
21 February 1995 was marred by procedural
infirmities, narrating that the trial court proceeded
with the hearing notwithstanding the urgent motion
for postponement of petitioners counsel of record, who
attended a previously scheduled hearing in Pampanga.
However, petitioners lawyer-representative was sent to
confirm the allegations in said motion. To petitioners
dismay, instead of granting a postponement, the trial
court allowed the continuance of the hearing on the
basis that there was nothing sensitive about [the
presentation of private respondents evidence].[11] At
the same hearing, the trial court admitted all the
documentary evidence offered by private respondents
and ordered the filing of the parties respective
memoranda. Hence, petitioner was virtually deprived
of its right to cross-examine the witness, comment on
or object to the offer of evidence and present
countervailing evidence. In fact, to date, petitioners
urgent motion to nullify the court proceedings remains
unresolved.
To stress its point, petitioner underscores the
conflicting views of Judge Benito C. Se, Jr., who heard
and tried almost the entire proceedings, and his
successor, Judge Marcelino L. Sayo, Jr., who issued the
assailed orders. In the resolution [12] of 1 March 1995,
Judge Se found private respondents claim for
warehouse lien in the amount of P734,341,595.06
unacceptable, thus:
In connection with [private respondents] claim for
payment of warehousing fees and expenses, this Court
cannot accept [private respondents] pretense that they
are entitled to storage fees and preservation expenses
in the amount of P734,341,595.06 as shown in their
Exhibits 1 to 11. There would, however, appear to be
legal basis for their claim for fees and expenses
covered during the period from the time of the
issuance of the five (5) quedans until demand for their
delivery was made by [petitioner] prior to the
institution of the present action. [Petitioner] should
not be made to shoulder the warehousing fees and
expenses after the demand was made. xxx[13]
Since it was deprived of a fair opportunity to
present its evidence on the warehousemans lien due
Noahs Ark, petitioner submitted the following
documents: (1) an affidavit of petitioners credit
investigator[14] and his report[15] indicating that Noahs
Ark only had 1,490 50kg. bags, and not 86,356.41 50kg.
bags, of sugar in its warehouse; (2) Noahs Arks
reports[16] for 1990-94 showing that it did not have
sufficient sugar stock to cover the quantity specified in
the subject quedans; (3) Circular Letter No. 18 (s.
1987-88)[17] of the Sugar Regulatory Administration
requiring sugar mill companies to submit reports at
weeks end to prevent the issuance of warehouse
receipts not covered by actual inventory; and (4) an
affidavit of petitioners assistant vice
president alleging that Noahs Arks daily storage fee
[18]
of P4/bag exceeded the prevailing industry rate.
Petitioner, moreover, laid stress on the fact that in
the questioned order of 14 July 1997, the trial court
relied solely on the Annual Synopsis of Production &
Performance Date/Annual Compendium of
Performance by Philippine Sugar Refineries from 1989
to 1994, in disregard of Noahs Arks certified reports
that it did not have sufficient sugar stock to cover the
quantity specified in the subject quedans. Between the
two, petitioner urged, the latter should have been
accorded greater evidentiary weight.
Petitioner then argued that the trial courts second
assailed order of 14 July 1997 misinterpreted our
decision in G.R. No. 119231 by ruling that the Refining
Contract under which the subject sugar stock was
produced bound the parties. According to petitioner,
the Refining Contract never existed, it having been
denied by Rosa Ng Sy; thus, the trial court could not
have properly based its computation of the
warehousemans lien on the Refining Contract.
Petitioner maintained that a separate trial was
necessary to settle the issue of the warehousemans
lien due Noahs Ark, if at all proper.
Petitioner further asserted that Noahs Ark could
no longer recover its lien, having raised the issue for
the first time only during the execution proceedings of
this Courts decision in G.R. No. 107243. As said claim
was a separate cause of action which should have been
raised in private respondents answer with
counterclaim to petitioners complaint, private
respondents failure to raise said claim should have
been deemed a waiver thereof.
Petitioner likewise insisted that under Section
29[19] of the Warehouse Receipts Law, private
respondents were barred from claiming the
warehousemans lien due to their refusal to deliver the
goods upon petitioners demand. Petitioner further
raised that private respondents failed to timely assert
their claim within the five-year prescriptive period,
citing Article 1149[20] of the New Civil Code.
Finally, petitioner questioned the trial courts
refusal to lift the garnishment order considering that
the levy on its real property, with an estimated market
value of P6,000,000,000, was sufficient to satisfy the
judgment award; and contended that the garnishment
was contrary to Section 103[21] of the Bangko Sentral ng
Pilipinas Law (Republic Act No. 7653).
On 8 August 1997, we required respondents to
comment on the petition and issued a temporary
restraining order enjoining the trial court from
implementing its orders of 15 April and 14 July 1997.
In their comment, private respondents first sought
the lifting of the temporary restraining order, claiming
that petitioner could no longer seek a stay of the
execution of this Courts decision in G.R. No. 119231
which had become final and executory; and the
petition raised factual issues which had long been
resolved in the decision in G.R. No. 119231, thereby
rendering the instant petition moot and
academic. They underscored that CA-G.R. No. SP No.
25938, G.R. No. 107243 and G.R. No. 119231 all
sustained their claim for a warehousemans lien, while
the storage fees stipulated in the Refining Contract had
the approval of the Sugar Regulatory
Authority. Likewise, under the Warehouse Receipts
Law, full payment of their lien was a pre-requisite to
their obligation to release and deliver the sugar stock
to petitioner.
Anent the trial courts jurisdiction to determine the
warehousemans lien, private respondents maintained
that such had already been established. Accordingly,
the resolution of 1 March 1995 declared that they were
entitled to a warehousemans lien, for which reason, the
execution of the judgment in favor of petitioner was
stayed until the latters full payment of the lien. This
resolution was then affirmed by this Court in our
decision in G.R. No. 119231. Even assuming the trial
court erred, the error could only have been in the
wisdom of its findings and not of jurisdiction, in which
case, the proper remedy of petitioner should have been
an appeal and certiorari did not lie.
Private respondents also raised the issue of res
judicata as a bar to the instant petition, i.e., the March
resolution was already final and unappealable, having
been resolved in G.R. No. 119231, and the orders
assailed here were issued merely to implement said
resolution.
Private respondents then debunked the claim that
petitioner was denied due process. In that February
hearing, petitioner was represented by counsel who
failed to object to the presentation and offer of their
evidence consisting of the five quedans, Refining
Contracts with petitioner and other quedan holders,
and the computation resulting in the amount
of P734,341,595.06, among other documents. Private
respondents even attached a copy of the transcript of
stenographic notes[22] to their comment. In refuting
petitioners argument that no writ of execution could
issue in absence of a specific amount in the dispositive
portion of this Courts decision in G.R. No. 119231,
private respondents argued that any ambiguity in the
decision could be resolved by referring to the entire
record of the case,[23] even after the decision had
become final.
Private respondents next alleged that the award
of P734,341,595.06 to satisfy their warehousemans
lien was in accordance with the stipulations provided
in the quedans and the corresponding Refining
Contracts, and that the validity of said documents had
been recognized by this Court in our decision in G.R.
No. 119231. Private respondents then questioned
petitioners failure to oppose or rebut the evidence they
presented and bewailed its belated attempts to present
contrary evidence through its pleadings. Nonetheless,
said evidence was even considered by the trial court
when petitioner sought a reconsideration of the first
assailed order of 15 April 1997, thus further
precluding any claim of denial of due process.
Private respondents next pointed to the fact that
they consistently claimed that they had not been paid
for storing the sugar stock, which prompted them to
file criminal charges of estafa and violation of Batas
Pambansa (BP) Blg. 22 against Rosa Ng Sy and Teresita
Ng. In fact, Sy was eventually convicted of two counts
of violation of BP Blg. 22. Private respondents,
moreover, incurred, and continue to incur, expenses for
the storage and preservation of the sugar stock; and
denied having waived their warehousemans lien, an
issue already raised and rejected by this Court in G.R.
No. 119231.
Private respondents further claimed that the
garnishment order was proper, only that it was
rendered ineffective. In a letter[24] received by the
sheriff from the Bangko Sentral ng Pilipinas, it was
stated that the garnishment could not be enforced
since petitioners deposits with the Bangko Sentral ng
Pilipinas consisted solely of legal reserves which were
exempt from garnishment. Petitioner therefore
suffered no damage from said garnishment. Private
respondents likewise deemed immaterial petitioners
argument that the writ of execution issued against its
real property in Pasay City was sufficient, considering
its prevailing market value of P6,000,000,000 was in
excess of the warehousemans lien; and invoked Rule 39
of the 1997 Rules of Civil Procedure, which provided
that the sheriff must levy on all the property of the
judgment debtor, excluding those exempt from
execution, in the execution of a money judgment.
Finally, private respondents accused petitioner of
coming to court with unclean hands, specifically citing
its misrepresentation that the award of the
warehousemans lien would result in the collapse of its
business. This claim, private respondents asserted, was
contradicted by petitioners 1996 Audited Financial
Statement indicating that petitioners assets amounted
to billions of pesos, and its 1996 Annual Report to its
stockholders where petitioner declared that the
pending legal actions arising from their normal course
of business will not materially affect the Groups
financial position.[25]
In reply, petitioner advocated that resort to the
remedy of certiorari was proper since the assailed
orders were interlocutory, and not a final judgment or
decision. Further, that it was virtually deprived of its
constitutional right to due process was a valid issue to
raise in the instant petition; and not even the doctrine
of res judicata could bar this petition as the element of
a final and executory judgment was lacking. Petitioner
likewise disputed the claim that the resolution of 1
March 1995 was final and executory, otherwise private
respondents would not have filed an opposition and
motion for partial reconsideration[26] two years
later. Petitioner also contended that the issues raised in
this petition were not resolved in G.R. No. 119231, as
what was resolved there was private respondents mere
entitlement to a warehousemans lien, without
specifying a corresponding amount. In the instant
petition, the issues pertained to the amount and
enforceability of said lien based on the arbitrary
manner the amount was determined by the trial court.
Petitioner further argued that the refining
contracts private respondents invoked could not bind
the former since it was not a party thereto. In fact, said
contracts were not even attached to the quedans when
negotiated; and that their validity was repudiated by a
supposed party thereto, Rosa Ng Sy, who claimed that
the contract was simulated, thus void pursuant to
Article 1345 of the New Civil Code. Should the refining
contracts in turn be declared void, petitioner
advocated that any determination by the court of the
existence and amount of the warehousemans lien due
should be arrived at using the test of reasonableness.
Petitioner likewise noted that the other refining
contracts[27] presented by private respondents to show
similar storage fees were executed between the years
1996 and 1997, several years after 1989. Thus,
petitioner concluded, private respondents could not
claim that the more recent and increased rates where
those which prevailed in 1989.
Finally, petitioner asserted that in the event that
this Court should uphold the trial courts determination
of the amount of the warehousemans lien, petitioner
should be allowed to exercise its option as a judgment
obligor to specify which of its properties may be levied
upon, citing Section 9(b), Rule 39 of the 1997 Rules of
Civil Procedure. Petitioner claimed to have been
deprived of this option when the trial court issued the
garnishment and levy orders.
The petition was set for oral argument on 24
November 1997 where the parties addressed the
following issues we formulated for them to discuss:
(1) Is this special civil action the appropriate remedy?
(2) Has the trial court the authority to issue a writ of
execution on Noahs Arks claims for storage fees
considering that this Court in G.R. No. 119231 merely
sustained the trial courts order of 20 December 1994
granting the Noahs Ark Omnibus Motion and setting
the reception of evidence on its claims for storage fees,
and of 1 March 1995 finding that there existed in favor
of Noahs Ark a warehousemans lien under Section 27
of R.A. No. 2137 and directing that the execution of the
judgment in favor of PNB be stayed and/or precluded
until the full amount of Noahs Arks lien is satisfied
conformably with Section 31 of R.A. No. 2137?
(3) Is [petitioner] liable for storage fees (a) from the
issuance of the quedans in 1989 to Rosa Sy, St. Therese
Merchandising and RNS Merchandising, up to their
assignment by endorsees Ramos and Zoleta to
[petitioner] for their loan; or (b) after [petitioner] has
filed an action for specific performance and damages
(Civil Case No. 90-53023) against Noahs Ark for the
latters failure to comply with [petitioners] demand for
the delivery of the sugar?
(4) Did respondent Judge commit grave abuse of
discretion as charged?[28]
In our resolution of 24 November 1997, we
summarized the positions of the parties on these
issues, thus:
Expectedly, counsel for petitioner submitted
that certiorari under Rule 65 of the Rules of Court is
the proper remedy and not an ordinary appeal,
contending, among others, that the order of execution
was not final. On the other hand, counsel for
respondents maintained that petitioner PNB
disregarded the hierarchy of courts as it bypassed the
Court of Appeals when it filed the instant petition
before this Court.
On the second issue, counsel for petitioner submitted
that the trial court had no authority to issue the writ of
execution or if it had, it denied PNB due process when
it held PNB liable for the astronomical amount
of P734,341,595.06 as warehousemans lien or storage
fees. Counsel for respondent, on the other hand,
contended that the trial courts authority to issue the
questioned writ of execution is derived from the
decision in G.R. No. 119231 which decision allegedly
provided for ample or sufficient parameters for the
computation of the storage fees.
On the third issue, counsel for petitioner while
presupposing that PNB may be held to answer for
storage fees, contended that the same should start
from the time the endorsees of the sugar quedans
defaulted in their payments, i.e., 1990 because before
that, respondent Noahs Arks claim was that it was the
owner of the sugar covered by the quedans. On the
other hand, respondents counsel pointed out that PNBs
liability should start from the issuance of the quedans
in 1989.
The arguments on the fourth issue, hinge on the parties
arguments for or against the first three issues. Counsel
for petitioner stressed that the trial court indeed
committed a grave abuse of discretion, while
respondents counsel insisted that no grave abuse of
discretion was committed by the trial court. [29]
Private respondents likewise admitted that during
the pendency of the case, they failed to avail of their
options as a warehouseman. Concretely, they could
have enforced their lien through the foreclosure of the
goods or the filing of an ordinary civil action. Instead,
they sought to execute this Courts judgment in G.R. No.
119231. They eventually agreed that petitioners
liability for the warehousemans lien should be
reckoned from the time it stepped into the shoes of the
original depositors.[30]
In our resolution of 24 November 1997, we
required the parties to simultaneously submit their
respective memoranda within 30 days or, in the
alternative, a compromise agreement should a
settlement be achieved. Notwithstanding efforts
exerted by the parties, no mutually acceptable solution
was reached.
In their respective memoranda, the parties
reiterated or otherwise buttressed the arguments
raised in their previous pleadings and during the oral
arguments on 24 November 1997, especially on the
formulated issues.
The petition is meritorious.
We shall take up the formulated issues in seriatim.
A. This Special Civil Action is an Appropriate
Remedy.
A careful perusal of the first assailed order shows
that the trial court not only granted the motion for
execution, but also appreciated the evidence in the
determination of the warehousemans lien; formulated
its computation of the lien; and adopted an offsetting
of the parties claims. Ineluctably, the order as in the
nature of a final order for it left nothing else to be
resolved thereafter. Hence, petitioners remedy was
to appeal therefrom.[31] Nevertheless, petitioner was
not precluded from availing of the extraordinary
remedy of certiorari under Rule 65 of the Rules of
Court. It is well-settled that the availability of an appeal
does not foreclose recourse to the extraordinary
remedies of certiorari or prohibition where appeal is
not adequate, or equally beneficial, speedy and
sufficient.[32]
Petitioner assailed the challenged orders as having
been issued without or in excess of jurisdiction or with
grave abuse of discretion and alleged that it had no
other plain, speedy and adequate remedy in the
ordinary course of law. As hereafter shown, these
claims were not unfounded, thus the propriety of this
special civil action is beyond question.
This Court has original jurisdiction, concurrent
with that of Regional Trial Courts and the Court of
Appeals, over petitions for certiorari,
prohibition, mandamus, quo warranto and habeas
corpus,[33] and we entertain direct resort to us in cases
where special and important reasons or exceptional
and compelling circumstances justify the same.
[34]
These reasons and circumstances are present here.
B. Under the Special Circumstances in This
Case, Private Respondents May Enforce
Their Warehousemans Lien in Civil Case No.
90-53023.
The remedies available to a warehouseman, such
as private respondents, to enforce his warehousemans
lien are:
(1)To refuse to deliver the goods until his lien
is satisfied, pursuant to Section 31 of the
Warehouse Receipt Law;
(2) To sell the goods and apply the proceeds
thereof to the value of the lien pursuant to
Sections 33 and 34 of the Warehouse
Receipts Law; and
(3) By other means allowed by law to a
creditor against his debtor, for the
collection from the depositor of all charges
and advances which the depositor
expressly or impliedly contracted with the
warehouseman to pay under Section 32 of
the Warehouse Receipt Law; or such other
remedies allowed by law for the
enforcement of a lien against personal
property under Section 35 of said law. The
third remedy is sought judicially by suing
for the unpaid charges.[35]
Initially, private respondents availed of the first
remedy. However, when petitioner moved to execute
the judgment in G.R. No. 107243 before the trial court,
private respondents, in turn, moved to have the
warehouse charges and fees due them determined and
thereafter sought to collect these from
petitioners. While the most appropriate remedy for
private respondents was an action for collection, in G.R.
No. 119231, we already recognized their right to have
such charges and fees determined in Civil Case No. 90-
53023. The import of our holding in G.R. No. 119231
was that private respondents were likewise entitled to
a judgment on their warehouse charges and fees, and
the eventual satisfaction thereof, thereby avoiding
having to file another action to recover these charges
and fees, which would only have further delayed the
resolution of the respective claims of the parties, and
as a corollary thereto, the indefinite deferment of the
execution of the judgment in G.R. No. 107243. Thus we
note that petitioner, in fact, already acquiesced to the
scheduled dates previously set for the hearing on
private respondents warehousemans charges.
However, as will be shown below, it would be
premature to execute the order fixing the
warehousemans charges and fees.
C. Petitioner is Liable for Storage Fees.
We confirmed petitioners liability for storage fees
in G.R. No. 119231. However, petitioners status as to
the quedans must first be clearly defined and
delineated to be able to determine the extent of its
liability.
Petitioner insisted, both in its petition and during
the oral arguments on 24 November 1997, that it was a
mere pledgee as the quedans were used to secure two
loans it granted.[36] In our decision in G.R. No. 107243,
we upheld this contention of petitioner, thus:
Zoleta and Ramos then used the quedans as
security for loans obtained by them from the
Philippine National Bank (PNB) as security for
loans obtained by them in the amounts of P23.5
million and P15.6 million,
respectively. These quedans they indorsed to the
bank.[37]
As such, Martinez v. Philippine National
Bank[38] becomes relevant:
In conclusion, we hold that where a warehouse receipt
or quedan is transferred or endorsed to a creditor only
to secure the payment of a loan or debt, the transferee
or endorsee does not automatically become the owner
of the goods covered by the warehouse receipt or
quedan but he merely retains the right to keep and
with the consent of the owner to sell them so as to
satisfy the obligation from the proceeds of the sale, this
for the simple reason that the transaction involved is
not a sale but only a mortgage or pledge, and that if the
property covered by the quedans or warehouse
receipts is lost without the fault or negligence of the
mortgagee or pledgee or the transferee or endorsee of
the warehouse receipt or quedan, then said goods are
to be regarded as lost on account of the real owner,
mortgagor or pledgor.
The indorsement and delivery of the warehouse
receipts (quedans) by Ramos and Zoleta to petitioner
was not to convey title to or ownership of the goods
but to secure (by way of pledge) the loans granted to
Ramos and Zoleta by petitioner. The indorsement of
the warehouse receipts (quedans), to perfect the
pledge,[39] merely constituted a symbolical or
constructive delivery of the possession of the thing
thus encumbered.[40]
The creditor, in a contract of real security, like
pledge, cannot appropriate without foreclosure the
things given by way of pledge.[41] Any stipulation to the
contrary, termed pactum commissorio, is null and void.
[42]
The law requires foreclosure in order to allow a
transfer of title of the good given by way of security
from its pledgor,[43] and before any such foreclosure,
the pledgor, not the pledgee, is the owner of the
goods. In Philippine National Bank v. Atendido,[44] we
said:
The delivery of the palay being merely by way of
security, it follows that by the nature of the transaction
its ownership remains with the pledgor subject only to
foreclosure in case of non-fulfillment of the
obligation. By this we mean that if the obligation is not
paid upon maturity the most that the pledgee can do is
to sell the property and apply the proceeds to the
payment of the obligation and to return the balance, if
any, to the pledgor (Art. 1872, Old Civil Code [Art.
2112, New Civil Code]). This is the essence of this
contract, for, according to law, a pledgee cannot
become the owner of, nor appropriate to himself, the
thing given in pledge (Article 1859, Old Civil Code [Art.
2088, New Civil Code]) The fact that the warehouse
receipt covering palay was delivered, endorsed in
blank, to the bank does not alter the situation, the
purpose of such endorsement being merely to transfer
the juridical possession of the property to the pledgees
and to forestall any possible disposition thereof on the
part of the pledgor. This is true notwithstanding the
provisions of the Warehouse Receipt Law.
The warehouseman, nevertheless, is entitled to
the warehousemans lien that attaches to the goods
invokable against anyone who claims a right of
possession thereon.
The next issue to resolve is the duration of time
the right of petitioner over the goods may be held
subject to the warehousemans lien.
Sections 8, 29 and 31 of the Warehouse Receipts
Law now come to fore. They provide, as follows:
SECTION 8. Obligation of warehousemen to deliver. A
warehouseman, in the absence of some lawful excuse
provided by this Act, is bound to deliver the goods
upon a demand made either by the holder of a receipt
for the goods or by the depositor, if such demand is
accompanied with:
(a) An offer to satisfy warehousemans lien;
 (b) An offer to surrender the receipt, if
negotiable, with such
indorsements as would be
necessary for the negotiation of
the receipt; and
(c) A readiness and willingness to sign,
when the goods are delivered,
an acknowledgment that they
have been delivered, if such
signature is requested by the
warehouseman.
In case the warehouseman refuses or fails to deliver
the goods in compliance with a demand by the holder
or depositor so accompanied, the burden shall be upon
the warehouseman to establish the existence of a
lawful excuse for such refusal.
SECTION 29. How the lien may be lost. A or to the adverse claimant, until the warehouseman
warehouseman loses his lien upon goods;
(a) By surrendering possession thereof, or
(b) By refusing to deliver the goods when a
demand is made with which he is
bound to comply under the provisions
of this Act.
SECTION 31. Warehouseman need not deliver until lien
is satisfied. A warehouseman having a lien valid against
the person demanding the goods may refuse to deliver
the goods to him until the lien is satisfied.
Simply put, where a valid demand by the lawful
holder of the quedans for the delivery of the goods is
refused by the warehouseman, despite the absence of a
lawful excuse provided by the statute itself, the
warehousemans lien is thereafter concomitantly
lost. As to what the law deems a valid demand, Section
8 enumerates what must accompany a demand; while
as regards the reasons which a warehouseman may
invoke to legally refuse to effect delivery of the goods
covered by the quedans, these are:
(1) That the holder of the receipt does not
satisfy the conditions prescribed in Section 8 of
the Act. (See Sec. 8, Act No. 2137)
(2) That the warehouseman has legal title in
himself on the goods, such title or right being
derived directly or indirectly from a transfer made
by the depositor at the time of or subsequent to
the deposit for storage, or from the
warehousemans lien. (Sec. 16, Act No. 2137)
(3) That the warehouseman has legally set up
the title or right of third persons as lawful defense
for non-delivery of the goods as follows:
(a) Where the warehouseman has been requested, by
or on behalf of the person lawfully entitled to a right of
property of or possession in the goods, not to make
such delivery (Sec. 10, Act No. 2137), in which case, the
warehouseman may, either as a defense to an action
brought against him for nondelivery of the goods, or as
an original suit, whichever is appropriate, require all
known claimants to interplead (Sec. 17, Act No. 2137);
(b) Where the warehouseman had information that the
delivery about to be made was to one not lawfully
entitled to the possession of the goods (Sec. 10, Act No.
2137), in which case, the warehouseman shall be
excused from liability for refusing to deliver the goods,
either to the depositor or person claiming under him
has had a reasonable time to ascertain the validity of
the adverse claims or to bring legal proceedings to
compel all claimants to interplead (Sec. 18, Act No.
2137); and
(c) Where the goods have already been lawfully sold to
third persons to satisfy a warehousemans lien, or have
been lawfully sold or disposed of because of their
perishable or hazardous nature. (Sec. 36, Act No. 2137).
(4) That the warehouseman having a lien valid against
the person demanding the goods refuses to deliver the
goods to him until the lien is satisfied. (Sec. 31, Act No.
2137)
(5) That the failure was not due to any fault on the part
of the warehouseman, as by showing that, prior to
demand for delivery and refusal, the goods were stolen
or destroyed by fire, flood, etc., without any negligence
on his part, unless he has contracted so as to be liable
in such case, or that the goods have been taken by the
mistake of a third person without the knowledge or
implied assent of the warehouseman, or some other
justifiable ground for non-delivery. (67 C.J. 532)[45]
Regrettably, the factual settings do not sufficiently
indicate whether the demand to obtain possession of
the goods complied with Section 8 of the law. The
presumption, nevertheless, would be that the law was
complied with, rather than breached, by
petitioner. Upon the other hand, it would appear that
the refusal of private respondents to deliver the goods
was not anchored on a valid excuse, i.e., non-
satisfaction of the warehousemans lien over the goods,
but on an adverse claim of ownership. Private
respondents justified their refusal to deliver the goods,
as stated in their Answer with Counterclaim and Third-
Party Complaint in Civil Case No. 90-53023, by
claiming that they are still the legal owners of the
subject quedans and the quantity of sugar represented
therein. Under the circumstances, this hardly qualified
as a valid, legal excuse. The loss of the warehousemans
lien, however, does not necessarily mean the
extinguishment of the obligation to pay the
warehousing fees and charges which continues to be
a personal liability of the owners, i.e., the pledgors, not
the pledgee, in this case. But even as to the owners-
pledgors, the warehouseman fees and charges have
ceased to accrue from the date of the rejection by
Noahs Ark to heed the lawful demand by petitioner for
the release of the goods.
The finality of our denial in G.R. No. 119231 of
petitioners petition to nullify the trial courts order of
01 March 1995 confirms the warehousemans lien;
however, such lien, nevertheless, should be confined to
the fees and charges as of the date in March 1990 when
Noahs Ark refused to heed PNBs demand for delivery
of the sugar stocks and in no event beyond the value of
the credit in favor of the pledgee (since it is basic that,
in foreclosures, the buyer does not assume the
obligations of the pledgor to his other creditors even
while such buyer acquires title over the goods less any
existing preferred lien thereover). [46] The foreclosure of
the thing pledged, it might incidentally be mentioned,
results in the full satisfaction of the loan liabilities to
the pledgee of the pledgors.[47]
D. Respondent Judge Committed Grave Abuse
of Discretion.
We hold that the trial court deprived petitioner of
due process in rendering the challenged order of 15
April 1996 without giving petitioner an opportunity to
present its evidence. During the final hearing of the
case, private respondents commenced and concluded
their presentation of evidence as to the matter of the
existence of and amount owing due to their
warehousemans lien. Their exhibits were duly marked
and offered, and the trial court thereafter ruled, to wit:
Court: Order.
With the admission of Exhibits 1 to 11, inclusive of
submarkings, as part of the testimony of Benigno
Bautista, the defendant [private respondents] is given
five (5) days from today to file its
memorandum. Likewise, plaintiff [petitioner] is given
five (5) days, from receipt of defendants [private
respondents] memorandum, to file its comment
thereto. Thereafter the same shall be deemed
submitted for decision.
SO ORDERED.[48]
Nowhere in the transcript of stenographic notes,
however, does it show that petitioner was afforded an
opportunity to comment on, much less, object to,
private respondents offer of exhibits, or even present
its evidence on the matter in dispute. In fact, petitioner
immediately moved to nullify the proceedings
conducted during that hearing, but its motion was
ignored and never resolved by the trial
court. Moreover, it cannot be said that petitioners filing
of subsequent pleadings, where it attached its
affidavits and documents to contest the
warehousemans lien, was sufficient to fully satisfy the
requirements of due process. The subsequent
pleadings were filed only to show that petitioner had
evidence to refute the claims of private respondents or
that the latter were not entitled thereto, but could not
have adequately substituted for a full-blown
opportunity to present its evidence, given the
exorbitant amounts involved. This, when coupled with
the fact that the motion to postpone the hearing filed
by petitioners counsel was not unreasonable, leads us
to conclude that petitioners right to fully present its
case was rendered nugatory. It is thus evident to us
that there was undue and unwarranted haste on the
part of respondent court to rule in favor of private
respondents. We do not hesitate to say that any tilt of
the scales of justice, no matter how slight, evokes
suspicion and erodes a litigants faith and hope in
seeking recourse before courts of law.
Likewise do we refuse to give credence to private
respondents allegation that the parties agreed that
petitioners presentation of evidence would be
submitted on the basis of affidavits, [49] without,
however, specifying any order or written agreement to
that effect.
It is interesting to note that among the evidence
petitioner wanted to present were reports obtained
from Noahs Ark, disclosing that the latter failed to
maintain a sufficient inventory to satisfy the sugar
stock covered by the subject quedans. This was a
serious allegation, and on that score alone, the trial
court should have allowed a hearing on the matter,
especially in light of the magnitude of the claims
sought. If it turns out to be true that the stock of sugar
Noahs Ark had in possession was below the quantities
specified in the quedans, then petitioner should not be
made to pay for storage and preservation expenses for
non-existent goods.
It was likewise grave abuse of discretion on the
part of respondent court to order immediate execution
of the 15 April 1997 order. We ruled earlier that said
order was in the nature of a final order fixing the
amount of the warehousemans charges and fees, and
petitioners net liability, after the set-off of the money
judgment in its favor in G.R. No. 107243. Section 1 of
Rule 39 of the Rules of Court explicitly provides that
execution shall issue as a matter of right, on motion,
upon a judgment or order that disposes of the action or
proceeding upon the expiration of the period to appeal
therefrom if no appeal has been duly
perfected. Execution pending appeal is, however,
allowed in Section 2 thereof, but only on motion with
due notice to the adverse party, more importantly, only
upon good reasons shown in a special order. Here,
there is no showing that a motion for execution
pending appeal was filed and that a special order was
issued by respondent court. Verily, the immediate
execution only served to further strengthen our
perception of undue and unwarranted haste on the
part of respondent court in resolving the issue of the
warehousemans lien in favor of private respondents.
In light of the above, we need not rule anymore on
the fourth formulated issue.
WHEREFORE, the petition is GRANTED. The
challenged orders of 15 April and 14 July 1997,
including the notices of levy and garnishment, of the
Regional Trial Court of Manila, Branch 45, in Civil Case
No. 90-53023 are REVERSED and SET ASIDE, and said
court is DIRECTED to conduct further proceedings in
said case:
(1) to allow petitioner to present its evidence
on the matter of the warehousemans lien;
(2) to compute the petitioners
warehousemans lien in light of the
foregoing observations; and
(3) to determine whether, for the relevant
period, Noahs Ark maintained a sufficient
inventory to cover the volume of sugar
specified in the quedans.
Costs against private respondents.
SO ORDERED.
PHILIPPINE NATIONAL BANK, petitioner, vs. HON.
PRES. JUDGE BENITO C. SE,
JR., RTC, BR. 45, MANILA;
NOAHS ARK SUGAR REFINERY; ALBERTO T.
LOOYUKO, JIMMY T. GO and WILSON T.
GO, respondents.
SYLLABUS
1. COMMERCIAL LAW; WAREHOUSE RECEIPTS LAW;
THE UNCONDITIONAL PRESENTMENT OF THE
RECEIPTS FOR PAYMENT CARRIED WITH IT
THE ADMISSIONS OF THE EXISTENCE AND
VALIDITY OF THE TERMS, CONDITIONS AND
STIPULATIONS WRITTEN ON THE FACE OF THE
WAREHOUSE RECEIPTS, INCLUDING THE
UNQUALIFIED RECOGNITION OF THE PAYMENT
OF WAREHOUSEMANS LIEN FOR STORAGE FEES
AND PRESERVATION EXPENSES; CASE AT BAR.
- Petitioner is in estoppel in disclaiming liability
for the payment of storage fees due the private
respondents as warehouseman while claiming to
be entitled to the sugar stocks covered by the
subject Warehouse Receipts on the basis of which
it anchors its claim for payment or delivery of the
sugar stocks. The unconditional presentment of
the receipts by the petitioner for payment against
private respondents on the strength of the
provisions of the Warehouse Receipts Law (R.A.
2137) carried with it the admission of the
existence and validity of the terms, conditions and
stipulations written on the face of the Warehouse
Receipts, including the unqualified recognition of
the payment of warehousemans lien for storage
fees and preservation expenses. Petitioner may
not now retrieve the sugar stocks without paying
the lien due private respondents as
warehouseman.
2. ID.; ID.; ID.; WAREHOUSEMANS LIEN;
POSSESSORY IN NATURE. - While the PNB is
entitled to the stocks of sugar as the endorsee of
the quedans, delivery to it shall be effected only
upon payment of the storage fees. Imperative is
the right of the warehouseman to demand
payment of his lien at this juncture, because, in
accordance with Section 29 of the Warehouse
Receipts Law, the warehouseman loses his lien
upon goods by surrendering possession thereof. In
other words, the lien may be lost where the
warehouseman surrenders the possession of the
goods without requiring payment of his lien,
because a warehousemans lien is possessory in
nature.
APPEARANCES OF COUNSEL
Rolan A. Nieto for petitioner.
Madella & Cruz Law Offices for private
respondents.
DECISION
HERMOSISIMA, JR., J.:
The source of conflict herein is the question as to
whether the Philippine National Bank should pay
storage fees for sugar stocks covered by five (5)
Warehouse Receipts stored in the warehouse of private
respondents in the face of the Court of Appeals
decision (affirmed by the Supreme Court) declaring the
Philippine National Bank as the owner of the said
sugar stocks and ordering their delivery to the said
bank. From the same facts but on a different
perspective, it can be said that the issue is: Can the
warehouseman enforce his warehousemans lien before
delivering the sugar stocks as ordered by the Court of
Appeals or need he file a separate action to enforce
payment of storage fees?
The herein petition seeks to annul: (1) the
Resolution of respondent Judge Benito C. Se, Jr. of the
Regional Trial Court of Manila, Branch 45, dated
December 20, 1994, in Civil Case No. 90-53023,
authorizing reception of evidence to establish the claim
of respondents Noahs Ark Sugar Refinery, et al., for
storage fees and preservation expenses over sugar
stocks covered by five (5) Warehouse Receipts which is
in the nature of a warehousemans lien; and (2) the
Resolution of the said respondent Judge, dated March
1, 1995, declaring the validity of private respondents
warehousemans lien under Section 27 of Republic Act
No 2137 and ordering that execution of the Court of
Appeals decision, dated December 13, 1991, be in
effect held in abeyance until the full amount of the
warehousemans lien on the sugar stocks covered by
five (5) quedans subject of the action shall have been
satisfied conformably with the provisions of Section 31
of Republic Act 2137.
Also prayed for by the petition is a Writ of
Prohibition to require respondent RTC Judge to desist
from further proceeding with Civil Case No. 90-53023,
except order the execution of the Supreme Court
judgment; and a Writ of Mandamus to compel
respondent RTC Judge to issue a Writ of Execution in
accordance with the said executory Supreme Court
decision.
THE FACTS
In accordance with Act No. 2137, the Warehouse
Receipts Law, Noahs Ark Sugar Refinery issued on
several dates, the following Warehouse Receipts
(Quedans): (a) March 1, 1989, Receipt No. 18062,
covering sugar deposited by Rosa Sy; (b) March 7,
1989, Receipt No. 18080, covering sugar deposited by
RNS Merchandising (Rosa Ng Sy); (c) March 21, 1989,
Receipt No. 18081, covering sugar deposited by St.
Therese Merchandising; (d)March 31, 1989, Receipt
No. 18086, covering sugar deposited by St. Therese
Merchandising; and (e) April 1, 1989, Receipt No.
18087, covering sugar deposited by RNS
Merchandising. The receipts are substantially in the
form, and contains the terms, prescribed for negotiable
warehouse receipts by Section 2 of the law.
Subsequently, Warehouse Receipts Nos. 18080
and 18081 were negotiated and endorsed to Luis T.
Ramos; and Receipts Nos. 18086, 18087 and 18062
were negotiated and endorsed to Cresencia K. Zoleta.
Ramos and Zoleta then used the quedans as security
for two loan agreements - one for P15.6 million and the
other for P23.5 million - obtained by them from the
Philippine National Bank. The aforementioned
quedans were endorsed by them to the Philippine
National Bank.
Luis T. Ramos and Cresencia K. Zoleta failed to pay
their loans upon maturity on January 9, 1990.
Consequently, on March 16, 1990, the Philippine
National Bank wrote to Noahs Ark Sugar Refinery
demanding delivery of the sugar stocks covered by the
quedans endorsed to it by Zoleta and Ramos. Noahs
Ark Sugar Refinery refused to comply with the demand
alleging ownership thereof, for which reason the
Philippine National Bank filed with the Regional Trial
Court of Manila a verified complaint for Specific
Performance with Damages and Application for Writ of
Attachment against Noahs Ark Sugar Refinery, Alberto
T. Looyuko, Jimmy T. Go and Wilson T. Go, the last three
being identified as the sole proprietor, managing
partner, and Executive Vice President of Noahs Ark,
respectively.
Respondent Judge Benito C. Se, Jr., in whose sala
the case was raffled, denied the Application for
Preliminary Attachment. Reconsideration therefor was
likewise denied.
Noahs Ark and its co-defendants filed an Answer
with Counterclaim and Third-Party Complaint in which
they claimed that they are the owners of the subject
quedans and the sugar represented therein, averring as
they did that:
9.*** In an agreement dated April 1, 1989, defendants
agreed to sell to Rosa Ng Sy of RNS Merchandising and
Teresita Ng of St. Therese Merchandising the total
volume of sugar indicated in the quedans stored at
Noahs Ark Sugar Refinery for a total consideration of
P63,000,000.00,
*** The corresponding payments in the form of checks
issued by the vendees in favor of defendants were
subsequently dishonored by the drawee banks by
reason of payment stopped and drawn against
insufficient funds,
*** Upon proper notification to said vendees and
plaintiff in due course, defendants refused to deliver to
vendees therein the quantity of sugar covered by the
subject quedans.
10. *** Considering that the vendees and first
endorsers of subject quedans did not acquire
ownership thereof, the subsequent endorsers and Mercado, et al. vs. Court of Appeals, 162 SCRA 75). The
plaintiff itself did not acquire a better right of questioned Orders themselves do not specify what
ownership than the original vendees/first endorsers. 1 material facts are in issue. (See Sec. 4, Rule 34, Rules of
Court).
The Answer incorporated a Third-Party Complaint
by Alberto T. Looyuko, Jimmy T. Go and Wilson T. Go, To require a trial notwithstanding pertinent allegations
doing business under the trade name and style Noahs of the pleadings and other facts appearing on the
Ark Sugar Refinery against Rosa Ng Sy and Teresita Ng, record, would constitute a waste of time and an injustice
praying that the latter be ordered to deliver or return to the PNB whose rights to relief to which it is plainly
to them the quedans (previously endorsed to PNB and entitled would be further delayed to its prejudice.
the subject of the suit) and pay damages and litigation
expenses. In issuing the questioned Orders, We find the respondent
Court to have acted in grave abuse of discretion which
The Answer of Rosa Ng Sy and Teresita Ng,
justify holding null and void and setting aside the Orders
dated September 6, 1990, one of avoidance, is
dated May 2 and July 4, 1990 of respondent Court, and
essentially to the effect that the transaction between
that a summary judgment be rendered forthwith in
them, on the one hand, and Jimmy T. Go, on the other,
favor of the PNB against Noahs Ark Sugar Refinery, et
concerning the quedans and the sugar stocks covered
al., as prayed for in petitioners Motion for Summary
by them was merely a simulated one being part of the
Judgment.2
latters complex banking schemes and financial
maneuvers, and thus, they are not answerable in
damages to him. On December 13, 1991, the Court of Appeals
nullified and set aside the orders of May 2 and July 4,
On January 31, 1991, the Philippine National Bank 1990 of the Regional Trial Court and ordered the trial
filed a Motion for Summary Judgment in favor of the court to render summary judgment in favor of the PNB.
plaintiff as against the defendants for the reliefs prayed On June 18, 1992, the trial court rendered judgment
for in the complaint. dismissing plaintiffs complaint against private
respondents for lack of cause of action and likewise
On May 2, 1991, the Regional Trial Court issued an
dismissed private respondents counterclaim against
order denying the Motion for Summary Judgment.
PNB and of the Third-Party Complaint and the Third-
Thereupon, the Philippine National Bank filed a
Party Defendants Counterclaim. On September 4, 1992,
Petition for Certiorari with the Court of Appeals,
the trial court denied PNBs Motion for
docketed as CA-G.R. SP. No. 25938 on December 13,
Reconsideration.
1991.
On June 9, 1992, the PNB filed an appeal from the
Pertinent portions of the decision of the Court of
RTC decision with the Supreme Court, G.R. No. 107243,
Appeals read:
by way of a Petition for Review on Certiorari under
Rule 45 of the Rules of Court. This Court rendered
In issuing the questioned Orders, the respondent Court judgment on September 1, 1993, the dispositive
ruled that questions of law should be resolved after and portion of which reads:
not before, the questions of fact are properly litigated. A
scrutiny of defendants affirmative defenses does not
WHEREFORE, the trial judges decision in Civil Case No.
show material questions of fact as to the alleged
90-53023, dated June 18, 1992, is reversed and set aside
nonpayment of purchase price by the vendees/first
and a new one rendered conformably with the final and
endorsers, and which nonpayment is not disputed by
executory decision of the Court of Appeals in CA-G.R SP.
PNB as it does not materially affect PNBs title to the
No. 25938, ordering the private respondents Noahs Ark
sugar stocks as holder of the negotiable quedans.
Sugar Refinery, Alberto T. Looyuko, Jimmy T. Go and
Wilson T. Go, jointly and severally:
What is determinative of the propriety of summary
judgment is not the existence of conflicting claims from
(a) to deliver to the petitioner Philippine
prior parties but whether from an examination of the
National Bank, the sugar stocks covered by
pleadings, depositions, admissions and documents on
the Warehouse Receipts/ Quedans which
file, the defenses as to the main issue do not tender
are now in the latters possession as holder
material questions of fact (see Garcia vs. Court of
for value and in due course; or
Appeals, 167 SCRA 815) or the issues thus tendered are
alternatively, to pay (said) plaintiff actual
in fact sham, fictitious, contrived, set up in bad faith or
damages in the amount of P39.1 million,
so unsubstantial as not to constitute genuine issues for
trial. (See Vergara vs. Suelto, et al., 156 SCRA 753;
 with legal interest thereon from the filing of
the complaint until full payment; and
(b) to pay plaintiff Philippine National Bank
attorneys fees, litigation expenses and
judicial costs hereby fixed at the amount of
One Hundred Fifty Thousand Pesos
(P150,000.00) as well as the costs.
SO ORDERED.3
On September 29, 1993, private respondents
moved for reconsideration of this decision. A
Supplemental/Second Motion for Reconsideration with
leave of court was filed by private respondents
on November 8, 1993. We denied private respondents
motion on January 10, 1994. .
Private respondents filed a Motion Seeking
Clarification of the Decision, dated September 1, 1993.
We denied this motion in this manner:
It bears stressing that the relief granted in this Courts
decision of September 1, 1993 is precisely that set out in
the final and executory decision of the Court of Appeals
in CA-G.R. SP No. 25938, dated December 13, 1991,
which was affirmed in toto by this Court and which
became unalterable upon becoming final and
executory. 4
Private respondents thereupon filed before the
trial court an Omnibus Motion seeking among others
the deferment of the proceedings until private
respondents are heard on their claim for
warehousemans lien. On the other hand, on August 22,
1994, the Philippine National Bank filed a Motion for
the Issuance of a Writ of Execution and an Opposition
to the Omnibus Motion filed by private respondents.
The trial court granted private respondents
Omnibus Motion on December 20, 1994 and set
reception of evidence on their claim for
warehousemans lien. The resolution of the PNBs
Motion for Execution was ordered deferred until the
determination of private respondents claim.
On February 21, 1995, private respondents claim
for lien was heard and evidence was received in
support thereof. The trial court thereafter gave both
parties five (5) days to file respective memoranda.
On February 28, 1995, the Philippine National
Bank filed a Manifestation with Urgent Motion to
Nullify Court Proceedings. In adjudication thereof, the
trial court issued the following order on March 1,
1995:
WHEREFORE, this court hereby finds that there exists in
favor of the defendants a valid warehousemans lien
under Section 27 of Republic Act 2137 and accordingly,
execution of the judgment is hereby ordered stayed and/
or precluded until the full amount of defendants lien on
the sugar stocks covered by the five (5) quedans subject
of this action shall have been satisfied conformably with
the provisions of Section 31 of Republic Act 2137. 5
Consequently, the Philippine National Bank filed
the herein petition to seek the nullification of the
above-assailed orders of respondent judge.
The PNB submits that:
I
PNBs RIGHT TO A WRIT OF EXECUTION IS SUPPORTED
BY TWO FINAL AND EXECUTORY DECISIONS:
THE DECEMBER 13, 1991 COURT OF APPEALS
DECISION IN CA-G.R. SP. NO. 25938; AND,
THE NOVEMBER 9, 1992 SUPREME COURT DECISION IN
G.R NO. 107243. RESPONDENT RTCS MINISTERIAL AND
MANDATORY DUTY IS TO ISSUE THE WRIT OF
EXECUTION TO IMPLEMENT THE DECRETAL PORTION
OF SAID SUPREME COURT DECISION
II
RESPONDENT RTC IS WITHOUT JURISDICTION TO
HEAR PRIVATE RESPONDENTS OMNIBUS MOTION. THE
CLAIMS SET FORTH IN SAID MOTION: (1) WERE
ALREADY REJECTED BY THE SUPREME COURT IN
ITS MARCH 9, 1994 RESOLUTION DENYING PRIVATE
RESPONDENTS MOTION FOR CLARIFICATION OF
DECISION IN .G.R. NO. 107243; AND (2) ARE BARRED
FOREVER BY PRIVATE RESPONDENTS FAILURE TO
INTERPOSE THEM IN THEIR ANSWER, AND FAILURE
TO APPEAL FROM THE JUNE 18, 1992 RTC DECISION IN
CIVIL CASE NO. 90-52023
III
RESPONDENT RTCS ONLY JURISDICTION IS TO ISSUE
THE WRIT TO EXECUTE THE SUPREME COURT
DECISION. THUS, PNB IS ENTITLED TO: (1) A WRIT OF
CERTIORARI TO ANNUL THE RTC RESOLUTION
DATED DECEMBER 20, 1994 AND THE ORDER
DATED FEBRUARY 7, 1995 AND ALL PROCEEDINGS
TAKEN BY THE RTC THEREAFTER; (2) A WRIT OF
PROHIBITION TO PREVENT RESPONDENT RTC FROM
FURTHER PROCEEDING WITH CIVIL CASE NO. 90-
53023 AND COMMITTING OTHER ACTS VIOLATIVE OF
THE SUPREME COURT DECISION IN G.R. NO. 107243;
AND (3) A WRIT OF MANDAMUS TO COMPEL
RESPONDENT RTC TO ISSUE THE WRIT TO EXECUTE
THE SUPREME COURT JUDGMENT IN FAVOR OF PNB
 The issues presented before us in this petition
revolve around the legality of the questioned orders of
respondent judge, issued as they were after we had
denied with finality private respondents contention
that the PNB could not compel them to deliver the
stocks of sugar in their warehouse covered by the
endorsed quedans or pay the value of the said stocks of
sugar.
Petitioners submission is on a technicality, that is,
that private respondents have lost their right to
recover warehousemans lien on the sugar stocks
covered by the five (5) Warehouse Receipts for the
reason that they failed to set up said claim in their
Answer before the trial court and that private
respondents did not appeal from the decision in this
regard, dated June 18, 1992. Petitioner asseverates that
the denial by this Court on March 9, 1994 of the motion
seeking clarification of our decision, dated September
1, 1993, has foreclosed private respondents right to
enforce their warehousemans lien for storage fees and
preservation expenses under the Warehouse Receipts
Act.
On the other hand, private respondents maintain
that they could not have claimed the right to a
warehouseman s lien in their Answer to the complaint
before the trial court as it would have been
inconsistent with their stand that they claim
ownership of the stocks covered by the quedans since
the checks issued for payment thereof were
dishonored. If they were still the owners, it would have
been absurd for them to ask payment for storage fees
and preservation expenses. They further contend that
our resolution, dated March 9, 1994, denying their
motion for clarification did not preclude their right to
claim their warehousemans lien under Sections 27 and
31 of Republic Act 2137, as our resolution merely
affirmed and adopted the earlier decision, dated
December 13, 1991, of the Court of Appeals (6th
Division) in CA-G.R. SP. No. 25938 and did not make
any finding on the matter of the warehouseman s lien.
We find for private respondents on the foregoing
issue and so the petition necessarily must fail.
We have carefully examined our resolution,
dated March 9, 1994, which denied Noahs Arks motion
for clarification of our decision, dated September 1,
1993, wherein we affirmed in full and adopted the
Court of Appeals earlier decision, dated December 13,
1991, in CA-G.R. SP. No. 25938. We are not persuaded
by the petitioners argument that our said resolution
carried with it the denial of the warehousemans lien
over the sugar stocks covered by the subject
Warehouse Receipts. We have simply resolved and
upheld in our decision, dated September 1, 1993, the
propriety of summary judgment which was then
assailed by private respondents. In effect, we ruled
therein that, considering the circumstances obtaining
before the trial court, the issuance of the Warehouse
Receipts not being disputed by the private
respondents, a summary judgment in favor of PNB was
proper. We in effect further affirmed the finding that
Noahs Ark is a warehouseman which was obliged to
deliver the sugar stocks covered by the Warehouse
Receipts pledged by Cresencia K. Zoleta and Luis T.
Ramos to the petitioner pursuant to the pertinent
provisions of Republic Act 2137.
In disposing of the private respondents motion for
clarification, we could not contemplate the matter of
warehousemans lien because the issue to be finally
resolved then was the claim of private respondents for
retaining ownership of the stocks of sugar covered by
the endorsed quedans. Stated otherwise, there was no
point in taking up the issue of warehousemans lien
since the matter of ownership was as yet being
determined. Neither could storage fees be due then
while no one has been declared the owner of the sugar
stocks in question.
Of considerable relevance is the pertinent
stipulation in the subject Warehouse Receipts which
provides for respondent Noahs Arks right to impose
and collect warehousemans lien:
Storage of the refined sugar quantities mentioned herein
shall be free up to one (1) week from the date of the
quedans covering said sugar and thereafter, storage fees
shall be charged in accordance with the Refining
Contract under which the refined sugar covered by this
Quedan was produced. 6
It is not disputed, therefore, that, under the
subject Warehouse Receipts provision, storage fees are
chargeable.
Petitioner anchors its claim against private
respondents on the five (5) Warehouse Receipts issued
by the latter to third-party defendants Rosa Ng Sy of
RNS Merchandising and Teresita Ng of St. Therese
Merchandising, which found their way to petitioner
after they were negotiated to them by Luis T. Ramos
and Cresencia K. Zoleta for a loan of P39.1 Million.
Accordingly, petitioner PNB is legally bound to stand by
the express terms and conditions on the face of the
Warehouse Receipts as to the payment of storage fees.
Even in the absence of such a provision, law and equity
dictate the payment of the warehouseman s lien
pursuant to Sections 27 and 31 of the Warehouse
Receipts Law (R.A. 2137), to wit:
SECTION 27. What claims are included in the
warehousemans lien. - Subject to the provisions of
section thirty, a warehouseman shall have lien on goods
deposited or on the proceeds thereof in his hands, for all
lawful charges for storage and preservation of the
goods; also for all lawful claims for money advanced,
interest, insurance, transportation, labor, weighing
coopering and other charges and expenses in relation to
such goods; also for all reasonable charges and expenses
for notice, and advertisement of sale, and for sale of the
goods where default has been made in satisfying the
warehousemans lien.
xxx xxx xxx
SECTION 31. Warehouseman need not deliver until lien
is satisfied. - A warehouseman having a lien valid
against the person demanding the goods may refuse to
deliver the goods to him until the lien is satisfied.
After being declared not the owner, but the
warehouseman, by the Court of Appeals on December
13, 1991 in CA-G.R. SP. No. 25938, the decision having
been affirmed by us on December 1, 1993, private
respondents cannot legally be deprived of their right to
enforce their claim for warehousemans lien, for
reasonable storage fees and preservation expenses.
Pursuant to Section 31 which we quote hereunder, the
goods under storage may not be delivered until said
lien is satisfied.
SECTION 31. Warehouseman need not deliver until lien
is satisfied. - A warehouseman having a lien valid
against the person demanding the goods may refuse to
deliver the goods to him until the lien is satisfied.
Considering that petitioner does not deny the
existence, validity and genuineness of the Warehouse
Receipts on which it anchors its claim for payment
against private respondents, it cannot disclaim liability
for the payment of the storage fees stipulated therein.
As contracts, the receipts must be respected by
authority of Article 1159 of the Civil Code, to wit:
ART. 1159. Obligations arising from contracts have the
force of law between the contracting parties and should
be complied with in good faith.
Petitioner is in estoppel in disclaiming liability for
the payment of storage fees due the private
respondents as warehouseman while claiming to be
entitled to the sugar stocks covered by the subject
Warehouse Receipts on the basis of which it anchors its
claim for payment or delivery of the sugar stocks. The
unconditional presentment of the receipts by the
petitioner for payment against private respondents on
the strength of the provisions of the Warehouse
Receipts Law (R.A. 2137) carried with it the admission
of the existence and validity of the terms, conditions
and stipulations written on the face of the Warehouse
Receipts, including the unqualified recognition of the
payment of warehousemans lien for storage fees and
preservation expenses. Petitioner may not now
retrieve the sugar stocks without paying the lien due
private respondents as warehouseman.
In view of the foregoing, the rule may be
simplified thus: While the PNB is entitled to the stocks
of sugar as the endorsee of the quedans, delivery to it
shall be effected only upon payment of the storage fees.
Imperative is the right of the warehouseman to
demand payment of his lien at this juncture, because,
in accordance with Section 29 of the Warehouse
Receipts Law, the warehouseman loses his lien upon
goods by surrendering possession thereof. In other
words, the lien may be lost where the warehouseman
surrenders the possession of the goods without
requiring payment of his lien, because a
warehousemans lien is possessory in nature.
We, therefore, uphold and sustain the validity of
the assailed orders of public respondent,
dated December 20, 1994 and March 1, 1995.
In fine, we fail to see any taint of abuse of
discretion on the part of the public respondent in
issuing the questioned orders which recognized the
legitimate right of Noahs Ark, after being declared as
warehouseman, to recover storage fees before it would
release to the PNB sugar stocks covered by the five (5)
Warehouse Receipts. Our resolution, dated March 9,
1994, did not preclude private respondents unqualified
right to establish its claim to recover storage fees
which is recognized under Republic Act No. 2137.
Neither did the Court of Appeals decision,
dated December 13, 1991, restrict such right.
Our Resolutions reference to the decision by the
Court of Appeals, dated December 13, 1991, in CA-G.R.
SP. No. 25938, was intended to guide the parties in the
subsequent disposition of the case to its final end. We
certainly did not foreclose private respondents
inherent right as warehouseman to collect storage fees
and preservation expenses as stipulated n the face of
each of the Warehouse Receipts and as provided for in
the Warehouse Receipts Law (R.A. 2137).
WHEREFORE, the petition should be, as it is,
hereby dismissed for lack of merit. The questioned
orders issued by public respondent judge are affirmed.
Costs against the petitioner.
SO ORDERED.
G.R. No. 107243 September 1, 1993
PHILIPPINE NATIONAL BANK, petitioner,
vs.
NOAH'S ARK SUGAR REFINERY, ALBERTO T.
LOOYUKO, JIMMY T. GO, WILSON T. GO, respondents.
Santiago, Jr. Vida, Corpuz & Associates for petitioner.
Tomas P. Madella Jr. for respondents.
NARVASA, C.J.:
The case at bar involves extraordinary situation in
which a Regional Trial
Judge — after receiving notice to the final and
executory judgment of the Court of Appeals in a special
civil action of certiorari in which said Trial Judge was a
respondent, and which judgment contained the
following disposition, viz.:
In issuing the questioned Orders, We
find the respondent Court to have acted
in grave abuse of discretion which
justify holding null and void and setting
aside the Orders date May 2 and July 4,
1990 of respondent Court, and that a
summary judgment be rendered
forthwith in favor of the PNB against
Noah's Ark Sugar Refinery, et al., as
prayed for in petitioner's Motion for
Summary Judgment.
SO ORDERED.
— proceeded to render judgment, not "in favor of the
PNB against Noah's Ark Sugar Refinery, et al.," but in
favor of the latter and its co-defendants. That judgment
has been appealed by PNB to this Court "on pure
questions of law."
No dispute exists about the facts which gave rise to the
controversy at bar.
In accordance with Act No. 2137, the Warehouse
Receipts Law, Noah's Ark Sugar Refinery issued on
several dates warehouse receipts (quedans) as follows:
March 1, 1989, receipt No. 18062
covering sugar deposited by Rosa Sy;
March 7, 1989, receipt No. 18080
covering sugar deposited by RNS
Merchandising (Rosa Ng Sy);
March 21, 1989, receipt No. 18081
covering sugar deposited by RNS
Merchandising;
March 31, 1989, receipt No. 18086
covering sugar deposited by St. Therese
Merchandising; and
April 1, 1989, receipt No. 18087
covering sugar deposited by RNS
Merchandising.
The receipts are substantially in the form, and contain
the terms, prescribed for negotiable warehouse
receipts by Section 2 of the law.
Subsequently, warehouse receipts Numbered 18080
and 18081 (covering sugar deposited by RNS
Merchandising) were negotiated and indorsed to Luis
T. Ramos; and receipts Numbered 18086 (sugar of St.
Therese Merchandising), 18087 (sugar of RNS
Merchandising) and 18062 (sugar of Rosa Sy) were
negotiated and indorsed to Cresencia K. Zoleta. Zoleta
and Ramos then used the quedans as security for loans
obtained by them from the Philippine National Bank
(PNB) in the amounts of P23.5 million and P15.6
million, respectively. These quedans they indorsed to
the bank.
Both Zoleta and Ramos failed to pay their loans upon
maturity on January 9, 1990. Consequently on March
16, 1990, PNB wrote to Noah's Ark Sugar Refinery
(hereafter, simply Noah's Ark) demanding delivery of
the sugar covered by the quedans indorsed to it by
Zoleta and Ramos. When Noah's Ark refused to comply
with the demand, PNB filed with the Regional Trial
Court of Manila a verified complaint for "Specific
Performance with Damages and Application for Writ of
Attachment" against Noah's Ark, Alberto T. Looyuko,
Jimmy T. Go, and Wilson T. Go, the last three being
identified as "the Sole Proprietor, Managing Partner
and Executive Vice President of Noah's Ark,
respectively."
The Court, by Order dated June 28, 1990, denied the
application for preliminary attachment after
conducting a hearing thereon. It denied as well the
motion for reconsideration thereafter filed by PNB, by
Order dated August 22, 1990.
Noah's Ark and its co-defendants then filed their
responsive pleading entitled "Answer with
Counterclaim and Third Party Complaint," dated June
21, 1990 in which they claimed, inter alia, that they
"are still the legal owners of the subject quedans and
the quantity of sugar represented thereon," a claim
founded on the following averments, to wit:
. . . In an agreement dated April 1, 1989,
defendants agreed to sell to Rosa Ng Sy
of RNS Merchandising and Teresita Ng
of St. Therese Merchandising the total
volume of sugar indicated in
the quedans stored at Noah's Ark Sugar
Refinery for a total consideration of
P63,000,000.00, . . . The corresponding
payments in the form of checks issued
by the vendees in favor of defendants
were subsequently dishonored by the
drawee banks by reason of "payment
stopped" and "drawn against
insufficient funds," . . . Upon proper
notification to said vendees and
plaintiff in due course, defendants
refused to deliver to vendees therein
the quantity of sugar covered by subject
quedans.
. . . Considering that the vendees and
first indorsers of subject quedans did
not acquire ownership thereof, the
subsequent indorsers and plaintiff itself
did not acquire a better right of
ownership than the original
vendees/first indorsers.
The defendants also adverted to PNB's supposed
awareness "that subject quedans are not negotiable
instruments within the purview of the Warehouse
Receipts Law but simply an internal guarantee of
defendants in the sale of their stocks of sugar. . . ."
The answer incorporated a third party complaint by
Alberto Looyuko, Jimmy T. Go and Wilson T. Go ("doing
business under the name and style of Noah's Ark Sugar
Refinery") against Rosa Ng Sy and Teresita Ng, praying
that the latter be ordered to deliver or return to them
the quedans (eventually indorsed to the PNB and now
subject of this suit) and pay damages and litigation
expenses.
The answer of Rosa Ng Sy and Teresita Ng, dated
September 6, 1990, was essentially to the effect that
the transaction between them and Jimmy T. Go
concerning the quedans and the sugar thereby covered
was "bogus and simulated (being part of the latter's)
complex banking schemes and financial maneuvers;"
that the simulated transaction "was just a tolling
scheme to
avoid VAT payment and other BIR assessments
(considering that) as . . . confidentially intimated (by
said Jimmy Go) . . . Noah's Ark is under sequestration
by the PCGG," and that the quedans "were in fact used
by Noah's Ark Executive Director, Luis T. Ramos, and
one Cresenciana K. Zoleta as security for their loans
from the bank . . . . (in the aggregate amount) of P39.1
million pesos."
On January 31, 1991, PNB filed a "Motion for Summary
Judgment." It asserted that "from the pleadings,
documents, and admissions on file, there is no genuine
issue as to a material fact proper for trial and that
plaintiff is entitled as a matter of law, . . . (to) a
summary judgment." It contended that the defenses set
up by Noah's Ark, et al. in their responsive pleading
involve purely questions of law — i.e., (a) that the
vendees of the sugar covered by the quedans in dispute
never acquired title to the goods because of their
failure to pay the stipulated purchase price and hence,
ownership over the sugar was retained by Noah's Ark,
et al.; and (b) PNB's action is premature since as
pledgee it failed to exercise the remedies provided in
the contract of pledge and the Civil Code. And it
specified in no little detail the admissions and
documents on record demonstrating the absence of
any genuine factual issue. On these premises, it prayed
"that a summary judgment be rendered for plaintiff
against the defendants for the reliefs prayed for in the
complaint," these reliefs being:
(a) to deliver to PNB the sugar stocks
covered by the Warehouse
Receipts/Quedans which are now in the
latter's possession as holder for value
and in due course; or alternatively, to
pay plaintiff actual damages in the
amount of P39.1 Million exclusive of
interest, penalties and charges; and
(b) to pay plaintiff attorney's fees,
litigation expenses and judicial costs
estimated at no less than P1 Million;
(and) such other reliefs just and
equitable under the premises.
An opposition to the motion was presented by
defendants Noah's Ark, et al., dated March 4, 1991,
asserting the existence of genuine issues, to wit:
whether or not the sale was ever consummated
considering that "the checks issued by the first
indorsees in payment of said quedans bounced," and
whether or not PNB acquired ownership over
the quedans considering that "it did not dispose (of)
said quedans under Art. 2112 of the Civil Code, as
specifically reflected in the contract of pledge," both
contentions allegedly being "material facts which has
(sic) to be supported by evidence."
The third-party defendants (Rosa Ng Sy and Teresita
Ng) also opposed the motion for summary judgment
insofar as concerned their counterclaim in relation to
the third-party complaint asserted against them.
On May 2, 1991, the Trial Court issued an Order
denying the motion for summary judgment on the
ground that an "examination of the pleadings and the
record readily shows that there exists sharply
conflicting claims among the parties relative to the
ownership of the sugar quedans as to whether or not
the subject quedans falls (sic) squarely within the
coverage of the Warehouse Receipt Law and whether
or not the transaction between plaintiff and third party
defendants is governed by contract of pledge that
would require plaintiff's compliance with Art. 2112,
Civil Code on pledge as regards the disposition of the
subjects quedans." PNB's for reconsideration was
denied by Order dated July 4, 1991.
PNB thereupon filed a petition for certiorari with the
Court of Appeals, which was docketed as CA-G.R. SP No.
25938. This special civil action eventuated in a
Decision promulgated on December 13, 1991 by the
Sixth Division of that Court, 1 nullifying and setting
aside the challenged Orders of May 2, 1991 and July 4,
1991, and commanding that "summary judgment be
rendered forthwith in favor of the PNB against Noah's
Ark Sugar Refinery, et al., as prayed for in petitioner's
Motion for Summary Judgment." Said the Appellate
Court:2
In issuing the questioned Orders, the
respondent Court ruled that "questions
of law should be resolved after and not
before, the questions of fact are
properly litigated." A scrutiny of
defendants' affirmative defenses does
not show material questions of facts as
to the alleged non-payment of purchase
price by the vendees/first indorsers,
and which non-payment is not disputed
by PNB as it does not materially affect
PNB's title to the sugar stock as holder
of the negotiable quedans.
What is determinative of the propriety
of summary judgment is not the
existence of conflicting claims for prior
parties but whether from an
examination of the pleadings,
depositions, admissions and documents
on file, the defenses as to the main issue
do not tender material questions of fact
(see Garcia vs. Court of Appeals 167
SCRA 815) or the issues thus tendered
are in fact sham, fictitious, contrived,
set up in bad faith or so unsubstantial
as not to constitute genuine issues for
trial. (See Vergara vs. Suelto, et al., 156
SCRA 753; Mercado, et al. vs. Court of
Appeals, 162 SCRA 75). The questioned
Orders themselves do not specify what
material facts are in issue. (See Sec. 4,
Rule 34, Rules of Court).
To require a trial notwithstanding
pertinent allegations of the pleadings
and other facts appearing on record,
would constitute a waste of time and an
injustice to the PNB whose rights to
relief to which it is plainly entitled
would be further delayed to its
prejudice.
In issuing the questioned Orders, We
find the respondent Court to have acted
in grave abuse of discretion which
justify holding null and void and setting
aside the Orders dated May 2 and July
4, 1990 of respondent Court, and that a
summary judgment be rendered
forthwith in favor of the PNB against
Noah's Ark Sugar Refinery, et al., as
prayed for in the petitioner's Motion for
Summary Judgment.
SO ORDERED.
Noah's Ark, et al. moved for reconsideration, but their
motion was denied by the Appellate Tribunal's
Resolution dated March 6, 1991.
The judgment became final. Entry of Judgment was
made on May 26, 1992. Thereafter the case was
remanded to the Court of origin.
On June 18, 1992, the Regional Trial Court rendered
judgment, but not in accordance with the aforesaid
decision of the Court of Appeals. As stated in the
opening paragraph of this opinion, instead of a
summary judgment "in favor of the PNB against Noah's
Ark Sugar Refinery, et al., as prayed for in . . . (PNB)'s
Motion for Summary Judgment," the Trial Court's
verdict decreed the dismissal of "plaintiff's complaint
against defendants Noah's Ark Sugar Refinery, Alberto
T. Looyuko, Jimmy Go and Wilson T. Go . . . . for lack of
cause of action;" and dismissal as well of the
counterclaim pleaded by the latter against PNB, and of
the third-party complaint, and the third-party
defendant's counterclaim.
The Trial Court declared that if "the only material facts
established on the basis of the pleadings, documentary
evidence on record, admissions and stipulations during
the hearing on PNB's application for a writ of
preliminary attachment, are the facts as alleged by
plaintiff and accepted as established by the Court of
Appeals, this Court will have no difficulty in finding for
plaintiff as prayed for in its motion for summary
judgment. But are the facts alleged by plaintiff the only
material facts established on the basis of the pleadings,
documentary evidence on record, stipulations and
admissions during the proceedings on the application
for a writ of preliminary attachment?" To this question
the Trial Court gave a negative answer, it being its view
that other facts, "as alleged by defendants . . . (and) not
disputed by PNB, have been likewise established."
The Trial Court later denied PNB's motion for
reconsideration (by Order dated September 4, 1992),
evidently finding merit in the argument of Noah's Ark,
et al., therein quoted, that "Certiorari as a mode of
appeal involves the review of judgment, award of final
order on the merits, while the original action
for certiorari and as a special civil action is generally
directed against an interlocutory order of the Court,
prior to an appeal from the judgment of the main case
which in the case at bar is specific performance . . ."
Hence, this appeal.
In CA-G.R. SP No. 25938 above mentioned, after an
extensive review of the entire record of the case before
the Regional Trial Court (including the admissions of
Noah's Ark, et al. and the parties' stipulations of fact),
as well as the pleadings filed by the parties before it,
the Court of Appeals arrived at the conclusion that a
summary judgment was proper since "there was no
substantial controversy on a(ny) material fact, the only
issues for the Court's
determination . . . (being) purely . . . questions of law, as
follows:
1) Whether or not the
non-payment of the
purchase price for the
sugar stock evidenced
by the quedans, by the
original depositors/
vendees (RNS
Merchandising and St.
Therese Merchandising)
rendered invalid the
negotiation of said
quedans by
vendees/first indorsers
to indorsers (Ramos
and Zoleta) and the
subsequent negotiation
of Ramos and Zoleta to
PNB.
2) Whether or not PNB
as indorsee/ pledgee of
quedans was entitled to
delivery of sugar stocks
from the
warehouseman, Noah's
Ark."
These legal questions were disposed of by the
Appellate Court as follows:
The validity of the negotiation by RNS
Merchandising and St. Therese
Merchandising to Ramos and Zoleta,
and by the latter to PNB to secure a
loan cannot be impaired by the fact that
the negotiation between Noah's Ark
and RNS Merchandising and St. Therese
Merchandising was in breach of faith on
the part of the merchandising firms or
by the fact that the owner (Noah's Ark)
was deprived of the possession of the
same by fraud, mistake or conversion of
the person to whom the warehouse
receipt/quedan was subsequently
negotiated if (PNB) paid value therefor
in good faith without notice of such
breach of duty, fraud, mistake or
conversion. (See Article 1518, New Civil
Code). And the creditor (PNB) whose
debtor was the owner of the negotiable
document of title (warehouse receipt)
shall be entitled to such aid from the
court of appropriate jurisdiction
attaching such document or in
satisfying the claim by means as is
allowed by law or in equity in regard to
property which cannot be readily
attached or levied upon by ordinary
process. (See Art. 1520, New Civil
Code). If the quedans were negotiable
in form and duly indorsed to PNB (the
creditor), the delivery of the quedans to
PNB makes the PNB the owner of the
property covered by said quedans and
on deposit with Noah's Ark, the
warehouseman. (See Sy Cong Bieng &
Co. vs. Hongkong & Shanghai Bank
Corp., 56 Phil. 598).
 In the case at bar, We found that the
factual bases underlying the
defendant's affirmative defenses (upon
which PNB has moved for summary
judgment) are not disputed and have
been stipulated by the parties and
therefore do not require presentation
of evidence. PNB's right to enforce the
obligation of Noah's Ark as a
warehouseman, to deliver the sugar
stock to PNB as holder of the quedans,
does not depend on the outcome of the
third-party complaint because the
validity of the negotiation transferring
title to the goods to PNB as holder of
the quedans is not affected by an act of
RNS Merchandising and St. Therese
Merchandising, in breach of trust, fraud
or conversion against Noah's Ark.
The Court considers the Appellate Court's conclusions
of fact and law to be correct.
The Trial Judge's argument that the Appellate Court's
decision failed to take account of other "material facts
established on the basis of the pleadings, documentary
evidence on record, stipulations and admissions during
the proceedings on the application for a writ of
preliminary attachment," is quite transparently
specious. For the matters cited by His Honor, as
allegedly not examined by the Court of Appeals, were
in fact duly considered by the latter — i.e., that "the
various postdated checks issued by the buyers (RNS
Merchandising and St. Therese Merchandising) in favor
of Noah's Ark were dishonored when presented for
payment . . (and hence) the buyers never acquired title
to the sugar evidenced by the quedans," 3 and that PNB
"did not follow the procedure stated in Article 2112 of
the Civil Code." 4 In its decision, as just pointed out, the
Court of Appeals explicitly ruled that the "validity of
the negotiation" of the quedans to PNB" cannot be
impaired by the fact that the negotiation between
Noah's Ark and RNS Merchandising and St. Therese
Merchandising was made in breach of faith on the part
of the merchandising firms or by the fact that the
owner (Noah's Ark) was deprived of the possession of
the same by fraud, mistake or conversion . . ." 5 It also
ruled that the quedans were negotiable documents and
had been duly negotiated to the PNB which thereby
acquired the rights set out in Article 1513 of the Civil
Code," 6 viz.:"
(1) Such title to the goods as the person
negotiating the documents to him had
or had ability to convey to a purchaser
in good faith for value and also such
title to the goods as the person to
whose order the goods were to be
delivered by the terms of the document
had or had ability to convey to a
purchaser in good faith for value; and
(2) The direct obligation of the bailee
issuing the document to hold
possession of the goods for him
according to the terms of the document
as fully as if such bailee had contracted
directly with him.
The Court of Appeals found correctly that the
indications in the pleadings to the contrary
notwithstanding, no substantial triable issue of fact
actually existed, and that certain issues raised in
answer, even if taken as established, would not
materially change the ultimate findings relative to the
main claim. 7 Its decision is entirely in accord with this
Court's rulings regarding the propriety of summary
judgments invoked by the Appellate
Tribunal, i.e., Vergara, Sr. v. Suelto, 8 and Mercado v.
Court of Appeals. 9 According to Vergara, for instance,
"even if the answer does tender issues — and therefore
a judgment on the pleadings is not proper — a
summary judgment may still be rendered on the
plaintiff's motion if he can show to the Court's
satisfaction that "except as to the amount of damages,
there is no genuine issue as to any material fact," 10 that
is to say, the issues thus tendered are not genuine, are
in other words sham, fictitious, contrived, set up in bad
faith, patently unsubstantial. 11 The determination may
be made by the Court on the basis of the pleadings, and
the depositions, admissions and affidavits that the
movant may submit, as well as those which the
defendant may present in turn."12
In any event, the conclusions of fact and law set out in
the Appellate Court's decision are undeniably binding
on all the parties to the case, the respondent Regional
Trial Judge included. Having been rendered by a
competent court within its jurisdiction, and having
become final and executory, the decision now operates
as the immutable law among the parties, the
respondent Trial Judge included; it has become the law
of the case and may no longer, in subsequent
proceedings, be altered or modified in any way, much
less reversed or set at naught, by the latter, or any
other judge, not even by the Supreme Court; it is an
unalterable determination of the propriety of a
summary judgment in the action in question, and upon
all the issues therein raised or which could have been
raised relative to the merits of said action.13
The Trial Judge may not evade compliance with the
final judgment of the Court of Appeals on the theory
that the latter had acted only on a mere interlocutory
order (the order denying PNB's motion for summary
judgment), while he had subsequently adjudged the
action for specific performance on the merits. Quite
obvious is that the Court of Appeals had decided that a
summary judgment was proper in said action of
specific performance, that this was in truth a
determination of the merits of the suit, that that
decision had become final and executory, and that the
decision expressly commanded His Honor to render
such a judgment. Under the circumstances, the latter's
duty was clear and inescapable.

It was not within the Trial Judge's competence or

discretion to take exception to, much less overturn, any
of the factual or legal conclusions laid down by the
Court of Appeals in its verdict. He was as much bound
thereby as the private parties themselves. His only
function was to implement and carry out the Appellate
Tribunal's judgment. It was an act of supererogation, of
presumptuousness, on His Honor's part to disregard
the Court's clear and categorical command, and to
dispose of the case in a manner diametrically opposed
thereto. In doing so, the Trial Judge committed grave
error which must forthwith be corrected.

WHEREFORE, the Trial Judge's Decision in Civil Case

No. 90-53023 dated June 18, 1992 is REVERSED and
SET ASIDE and a new one rendered conformably with
the final and executory Decision of the Court of
Appeals in CA-G.R. SP No. 25938, ordering the private
respondents, Noah's Ark Sugar Refinery, Alberto T.
Looyuko, Jimmy T. Go and William T. Go, jointly and
severally:

a) to deliver to the petitioner Philippine National Bank,

"the sugar stocks covered by the Warehouse
Receipts/Quedans which are now in the latter's
possession as holder for value and in due course; or
alternatively, to pay (said) plaintiff actual damages in
the amount of P39.1 Million," with legal interest
thereon from the filing of the complaint until full
payment; and

b) to pay plaintiff Philippine National Bank attorney's

fees, litigation expenses and judicial costs hereby fixed
at the amount of one hundred fifty thousand pesos
(150,000.00), as well as the costs.

SO ORDERED.